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Access to finance - women’s enterprises

(As the leading international accountancy body, ACCA operates in a challenging environment: global, continually evolving and increasingly competitive. Augmenting ACCA’s strong position in a worldwide market is ACCA’s well-respected research programme, generating high-profile, high-quality, cutting-edge research with global focus, wide dissemination and strong emphasis on public policy influence and practical value. This article contains findings from relevant research reports).

Evidence from past research suggests that women face barriers accessing finance to begin new enterprises, they start with only one-third as much capital as men and are less likely to use external financing as the business grows.

Furthermore, studies have shown that accountants can play an important role in obtaining finance for their clients and are an important source of advice and support.

New research from ACCA seeks to understand the extent to which gender affects the ability to access finance, the extent to which this is ‘supply’ or ‘demand’ led and the accountant’s role in the process.

Overall, it would appear that women-owned businesses tend to be smaller than those owned by men, and their owners are more likely to be sole traders, to locate in traditionally female occupational sectors, and operate on a part-time basis and from the home.

Regarding business finance, it emerges that women-owned businesses start with lower levels of capitalisation, lower ratios of debt finance and are less likely to access private equity or venture capital.

ACCA’s research: key findings

From the wealth of data and information realised from this study, the main findings are summarized here.

The small-firm owners’ perspective

In contrast to self-employed men, women:

* Own smaller businesses in terms of employment and turnover

* Are more likely to operate from home and on a part-time basis

* Are more likely to have entered self-employment from part-time work or after a career break

* At start up spend less time engaged in activity related to acquiring finance

* Start businesses with lower investment

* Are more likely to use credit card debt as a source of start-up capital

* Have more formal qualifications

* Deny any experiences of overt discrimination, but all could offer examples where gendered presumptions had influenced their experience of self-employment.

In terms of business finance, in contrast to self-employed women, men:

* Invest three times more in their businesses at start-up

* Utilise bank funding during and after start-up.

For both men and women:

* Supply of funding is not considered problematic

* Women tend to be more risk averse regarding demand.

In terms of customers:

* Male business owners are more likely to have male customers and vice versa for

* Women, which may influence performance given the greater resources commanded by men.

In terms of advice:

* Both men and women value accountants as business advisers

* Women are more likely to use a broader range of advisers, including Business Link.

The accountants’ perspective:

* Men are more likely than women to seek advice about a range of formal funding options whereas women are more likely to seek advice about informal finance sources such as friends and family.

* Female small-firm owners tend to be more risk averse regarding business funding than their male counterparts.

* Women are less likely than men to seek advice about a range of management issues, with the exception of employment regulation.

* Female clients are more likely to own service sector businesses, to be less growth oriented, to operate their firms on a part-time basis and from home.

* Female accountants believe that gender should not affect their experiences as business owners but all could report examples where this had occurred.

* Gender does not influence interaction with established clients but might influence clients in their initial choice of accountant, in that men would prefer to deal with male professionals.

* No evidence is offered for a ‘funding gap’ in terms of small-firm finance.

* Preferred funding sources are personal savings, friends and family, credit cards, bank loans and overdrafts plus grants.

* Very few firms seek private equity or venture capital.

* Small-firm owners utilise accountants as general business and funding advisers as they are knowledgable, professional, familiar and readily accessible.

* Business advice is regularly given beyond the realms of fee-generating compliance services.

* Much informal advice delivered outside the realms of traditional or formal fee-paying services is not fully compensated.

The Bankers stated that:

* Applicant gender has no impact upon funding decisions

* Women are less likely to seek bank funding - they make approximately 20% of applications

* Women apply for smaller amounts of funding than their male counterparts

* Women are more likely to be concentrated in service sector firms

* Funding applications compiled with the support of accountants are more likely to be appropriately presented and organised, which facilitates the decision process

* Accountant support adds credibility to funding applications as their scrutiny implies some degree of due diligence and so reduces information asymmetry.


Findings from this study support earlier evidence that gender does affect the experience of small-firm ownership in that women tend to own smaller enterprises, locate them in the service sector, and are more likely to operate from home and on a part-time basis.

Nonetheless, it is recognised that women’s experiences are not homogeneous and attention should be paid to the manner in which issues such as class, race, age, etc will interact with gender and so affect self-employment.

Regarding gender and finance for small firms, while there is an initial refutation that gender has any influence upon the manner in which small businesses are funded, it would appear that the characteristics of female-owned firms will shape access to finance.

In terms of business advice, the findings indicate that accountants offer a valuable service to their small-firm clients as both general and funding advisers. However, it is sometimes problematic for accountants to charge for such services.

Bank loan officers also recognize the value of accountants in supporting funding applications from small-firm owners in that, while each application is dealt with fairly and equitably, those informed by accountants are appropriately organized and credible.

Overall, the research finds no evidence for a funding gap. The supply of finance is considered to be adequate but there are notable differences in demand for business funding in that women are consistently portrayed as being more risk averse and cautious than their male counterparts.


Women entrepreneurs

Women business owners should be encouraged to ensure that business start-up capitalization meets the needs of their business and is sufficient to enable start-up and business growth.

Women-owned businesses are often concentrated in traditionally female sectors of the economy. Their success will depend on breaking out of low-value sectors and entering higher-value markets.

Female business owners should consider spending a higher proportion of their time engaged in activity related to acquiring finance at start-up and throughout the life of their business.

Women-owned businesses should consider alternative sources of finance to those traditionally used at start-up and during the life of the business; that is, to consider moving away from using credit cards to fund the business and instead using, for example, bank overdrafts, factoring and leasing.


Accountants are in an excellent position to provide high-quality advice to women entrepreneurs and bring credibility to the finance application process.

Accountants should, therefore, be aware of the need to assist women entrepreneurs in accessing a wider range of external financial products.

Undercapitalisation at start-up has an enduring negative effect on business survival and growth prospects.

Accountants have an educational role in advising women entrepreneurs of the importance of capitalisation at start-up and during the business growth process.


Finance providers -Women-owned businesses constitute an important new market segment. Given the potential size and value of this segment, it is clearly not in banks’ interests to discriminate against women. But banks must ensure that the services provided to entrepreneurs are appropriate and suited to both male and female business owners.

Given that women are more likely than men to under-capitalise their business at start-up, banks must have a role in encouraging women both to ensure that their business is fully capitalised and to consider sources of finance such as bank overdraft, factoring and leasing.

Given that funding applications with the support of the accountant facilitates the lending decision process, banks should work with business owners and professional business advisers to ensure that applications for finance are made in consultation with accountants.

Professional business advisors and community enterprise support advisors have an educational role in advising women entrepreneurs of the importance of capitalization at start-up and during the business growth process.

Professional business advisors should work more closely with the accountancy profession to ensure that accountants can direct small firms to appropriate sources of advice.


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