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Women Business Owners, 30 Years after HR 5050

Before 1988 – a mere 30 years ago – any woman looking for a business loan would have needed a male relative as their co-signer. They were required to meet a higher standard of personal net growth than men and were asked for bigger down payments despite being offered much smaller loans. This meant that half of the American population faced significant barriers to success and wealth-building and were unable to contribute to the economic growth of the country.

Despite these barriers the few women-owned businesses that existed thrived, which did not go unnoticed. HR 5050, Women’s Business Ownership Act of 1988, sought to remedy the situation and made it possible for women to take out business loans under their own name. A report commissioned by Congress concluded that “Women-owned businesses may well provide the cutting edge—and the American advantage—in the worldwide economic competitiveness fast upon us.” Subsequently, the National Women’s Business Council was born and tasked with helping advance women’s entrepreneurship. 

Thirty years have passed, and a lot of progress has been made. According to the State of Women-Owned Businesses report, there are now 12.3 million businesses that are majority-owned by women, making up 40% of the total. And women-owned firms have grown faster and more resilient than the average. Since the recession in 2007, the number of women-owned businesses has surged by 58% while the total of businesses only grew 12%. Employment by women-owned businesses also grew by 21%, while for all businesses it declined by 0.8%.   

Some barriers remain, and we’re still a long way from parity. Despite revenue from women-owned firms growing to $1.8 trillion in 2018, it represents merely 4.3% of the total revenue of firms in the United States this year. Many traditional lenders remain wary of granting loans to women entrepreneurs, despite the passage of HR 5050. Simonida Cvejic, founder of the Bay Area Medical Academy and CAMEO’s 2011 Faces of Entrepreneurship winner, has spoken with many women business owners and has heard their frustrating accounts. “There’s discrimination against businesses owned by women,” she says. “I’ve heard of banks, when a woman business owner approaches them with an application for a loan, they ask to interview her husband.”

This anecdotal evidence only confirms what the data bears out — that access to capital is still significantly harder for women entrepreneurs. A recent study by Guidant Financial found that business loan approval rates are 15-20% lower for women than for men. Another survey shows that men business owners are twice as likely to raise more than $100,000 of outside funding than their women counterparts. Even in the burgeoning gig economy, where women don’t need loans or funding to become their own bosses, female freelancers are paid about half as much as their male counterparts for the same services. 

October is National Women’s Business Month, and this year we celebrate the 30th anniversary of the passing of HR 5050. Let’s take this opportunity to highlight how far women business owners have come and the enormous impact that they have on their communities and the national economy. It is also the perfect chance to continue working and advocating for an equal playing field in the business world — one where gender is not a factor in the chances of success of hardworking people with big ideas.

To learn more about the opportunities and challenges faced by women business owners, visit our policy and research page.