Women entrepreneurs make credit gains

Nation's Business, Jan, 1997 by Sharon Nelton

After many years of fighting for access to credit, women business owners are making some headway.

According to a new study by the Washington-based National Foundation for Women Business Owners (NFWBO), women entrepreneurs today are almost as likely to have bank loans or credit lines as their male counterparts - 46 percent of women compared with 49 percent of men.

The study also found that women's sources of capital changed significantly between 1992 and 1996. Seventy-two percent of women business owners are using business earnings to finance their firms, nearly double the percentage of four years ago.

Conversely, the percentage of women entrepreneurs using credit cards as a source of capital was cut by more than half in the same period, from 52 percent to 23 percent, a level similar to that of men entrepreneurs, the study shows.

"The challenges faced by women entrepreneurs have not disappeared, however," cautions Susan Peterson, the NFWBO's chairwoman and the president of a communications-training firm also based in Washington. "Women business owners still have lower levels of available credit than their male counterparts."

The study found that 43 percent of women-owned businesses have no more than $25,000 of credit available, compared with 37 percent of men-owned businesses.

Eight hundred businesses were surveyed for the study, which also shows differences by sex in the way credit is used: Women business owners use credit primarily for growth and expansion, while men are more likely to use it to smooth out cash flow and consolidate debt.

A copy of the report, Capital, Credit and Financing: Comparing Women and Men Business Owners' Sources and Uses of Capital, is available for $29.95. Contact the NFWBO at http://www.nfwbo.org on the World Wide Web, or call (301) 495-4975.