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REAL Co-Lab

Access to Finance: Women-Owned Businesses

two women reviewing a report in a small business

Small businesses are the backbone of Montana's economy, making up 99.3% of all businesses. This report examines financial challenges faced by women-owned businesses in Montana, based on surveys conducted by UM's REAL Co-Lab and partners. The findings reveal disparities in financing access and usage by women entrepreneurs and suggest ways to address these challenges.

Overview:

Access to Capital:

64%

Of the 27.6% of all survey respondents who had never sought business financing, 64% were women.

56%

Compared to 49% of all business owners, 56% of rural women report struggles in accessing capital.

Use of Loans:

33%

Compared to 48% of men, 33% of women business owners surveyed used business loans.

16%

Although women use credit cards for business purposes at similar rates to men, only 16% of women rely on loans from friends and family, compared to 29% of men.

Business Characteristics:

Women-owned businesses are often smaller in scale, with fewer employees and lower revenues than male-owned businesses.

Challenges and Biases:

Women cited challenges like bias in negotiations, selling prices, and obtaining funding.
Some respondents avoid pursuing loans due to perceptions of systematic bias and prefer to sell-finance their business gradually.

Recommendations:

Develop financial products tailored to the needs of women-owned businesses, including those focused on smaller-scale and service-based industries.
Increase training and awareness programs to help women understand and access available financing options.
Support community-focused funding initiatives like regional banks, and credit unions, which are often preferred by women entrepreneurs.
Encourage lenders to gain insights into the unique financial goals and challenges women entrepreneurs to better serve this growth market.

graph depicting proportion of women business owners who report access to capital is a challenge graph showing use of business loans by men and by women

This report underscores that while women entrepreneurs face significant barriers to accessing capital, addressing these disparities presents a valuable opportunity to support the growth of women-owned businesses and strengthen Montana's economy.