Four Reasons Why Accessing Funds Is Difficult for Women in Business

For the longest time, women in business have encountered numerous challenges. In most cases, these are different from those experienced by men in business. Among these challenges is accessing funds. 

Despite the pivotal role that funds play in starting and running a business, women often find themselves disadvantaged in their access. Failure to access funds cripples women-owned businesses leading some to close. 

Here are some of the reasons accessing funds is difficult for women in business

The Model of the Financial Lenders

Almost all financial lenders require the borrower to present collateral. Examples of collateral needed are land, a house, or cattle. Most cultures have men as owners of properties while women remain as keepers. Hence, lack of access to such collateral ends up being a hindrance to women acquiring loans to start or expand their businesses. 

Also, such loans generally come with higher interests when women manage to secure them. Servicing such loans ends up being a burden to many entrepreneurs and many end up defaulting. The result is that their credit score is affected, making it even harder to get funding elsewhere.

Existing Psychological Bias Against Women

Gender-based discrimination against women in entrepreneurship hinders them from accessing funds. A telegraph pole conducted showed that two-thirds of female founders at one point experienced sexism. These women were assumed to be less determined than their male counterparts to get investors despite the lack of evidence to show that female-led companies perform poorly compared to those led by men. 

Additionally, historically, men’s businesses dominated and are mostly unreceptive to women entrepreneurs. While men are taken to display aggressiveness and strength, most will only judge women as being emotional. Hence, lenders assume female entrepreneurs are a liability when asking for funding from lenders.

Women Businesses are not taken seriously 

It is unfortunate that although women try their best to prove their potential in entrepreneurship, many still believe that they are inferior. They imagine that women are too emotional and don’t have what it takes to run a successful business. Moreover, others assume that women are extravagant and will squander all the business money on unnecessary expenses, leading to the failure of the business. Unfortunately, some of the people with these mentalities are the fund lenders. Proving to these people that you are worth investing in as a woman becomes a hard nut to crack. 

There Are Few Networks and Mentors

The low number of female founders reduces the number of women who can mentor and advise other female entrepreneurs competently. This hinders upcoming women entrepreneurs from learning from their peers. 

Additionally, networking for women in business becomes challenging because bonding activities such as golf courses, shooting, and men-only clubs lock women out. The lack of traditional avenues for business networking hinders women from accessing funds for their businesses.

Is There a Solution to These Hindrances?

Women in business need to overcome these barriers to help secure their place in the business world. A significant step would be for the sensitisation of women in business to unite and organise business forums and workshops for female entrepreneurs. 

These forums will go a long way in mentoring enterprising women. Additionally, financial systems should consider abolishing collateral as a requirement for granting loans to make loan access easier for women. 

Sources: forbes, business news daily, entrepreneur, core, weforum, telegraph

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