Our next president, be he George Bush or Michael Dukakis, is certain to come under pressure to do more for small businesses owned by women.
While statistics show that the number of companies owned by women is increasing significantly, other studies show that women entrepreneurs continue to face more difficulties than their male counterparts.The rise in business ownership by women, and their increasing complaints about loan and other financial discrimination and troubles winning federal procurement contracts, have caught the attention of Congress. The result is that a number of bills are certain to be introduced next year in an attempt to address and remedy the women business owners' complaints.
Women are starting businesses about twice as fast as men. Twenty years ago, women owned less than 5 percent of all American enterprises. Today 28 percent of all sole proprietorships are owned by women, and government estimates say this number could reach 50 percent by the year 2000.
But, as a study by the House Small Business Committee found, women still face significant barriers in getting started and then prospering. The committee report identified four barriers to women-owned businesses that merit special attention:
- The need for management and technical training to maximize growth potential.
- Inequality of access to commercial credit.
- The virtual exclusion of women-owned businesses from government procurement activities.
- The inadequacy of information and data relative to women-owned businesses.
Winning government contracts is a particular problem not only for small businesses owned by women but for small businesses in general. While small firms have been awarded more procurement contract dollars, their share of overall procurement has been declining.
Thus, while the number of federal prime contracts going to women has increased since 1979, the total still represents only 1 percent of federal purchases. The House committee report labeled this as "a figure that is far too low and representative of neither the potential of women-owned businesses nor their reasonable share."
The committee charged that federal efforts "in support of women's business enterprise has been weak," for the most part limited "to dissemination of information," not contracts.
The Farmer's Home Administration, in running its business and industrial loan program, reported 2,244 non-farm business loans in the last four years; only five went to women.
Loans to women by the Small Business Administration in the last four years decreased in numbers, dollar amount and total loan percentage.
In 1986, the Defense Department handed out $136.5 billion in procurement dollars; only $1.1 billion went to women.
In 1987, only 1.3 percent of the Environmental Protection Agency's procurement budget went to companies owned by women.
At the State Department the figure was 1.9 percent, and at the Transportation Department it was 3.2 percent.
Another continuing problem for both new and existing businesses owned by women is lack of credit and discrimination by male-dominated financial institutions.
The House committee heard from a registered nurse who after 20 years experience set out to buy a nursing home. Her banker, a man, told her she would need a 25 percent down payment and a "gentleman" co-signer.
In another case, the committee heard from a successful woman architect in San Francisco who, when applying for a bank loan, was told not to waste her time because the bank just didn't make business loans to women. The architect tried another bank, faced another male loan officer and was told the same thing - after the loan officer walked around his desk and patted the architect on the head while giving her the bad news.
A recent national surevy of women business owners said that 68 percent believe they faced sexual discrimination in business loan applications; 29 percent of those who did receive loans were convinced the loans were offered on discriminatory terms.
A bill to address these specific issues has been introduced in the House by House Small Business Committee Chairman John LaFalce, D-N.Y. It has little chance this year, but certainly will be re-introduced in the 101st Congress.
The bill calls for the president to create a National Women's Business Council made up of private and government officials. The council would have to send Congress an action plan to support women business owners.
The bill also would amend the Equal Credit Opportunity Act of 1974 to require banks and other lenders to inform applicants in writing of their right to receive written reasons for denial of loan applications and refrain from inquiring into the marital status of loan applicants.
And the legislation would establish a three-year, $10 million program to finance joint public and private demonstration projects to provide management training and technical assistance to women business owners.