Women-Owned Businesses Lose Market Share

WASHINGTON (TheStreet) -- There may be strength in numbers, but that doesn't seem to hold true when it comes to small businesses owned by women.

A report this month from the U.S. Women's Chamber of Commerce finds that while the number of women-owned businesses grew by 44% between 1997 and 2007, the overall share of revenue dropped from 4.4% in 1997 to 4% in 2007. Women owned more than 7.8 million businesses in 2007, or about 29% of the total in the U.S. The report counted only firms that are officially incorporated.

Of firms with at least $1 million in annual revenue, only one in five is owned by women, according to the Center for Women's Business Research, a firm in McLean, Va. Three percent of women-owned firms have revenues of $1 million or more, compared with 6% of those owned by men. (The Center for Women's Business Research puts the percentage of women-owned firms at closer to 50% and estimates that 10.1 million firms are owned by females.)

Access to capital is a major problem for all small businesses. According to the National Small Business Association, small businesses are facing the tightest financing in 17 years. But the Women's Chamber of Commerce report says it's especially tough for women.

A common problem is that most women-owned businesses are small, and banks may not want or have the resources to deal with microloans, says Margo Dorfman, chief executive officer of the chamber. The organization still hears reports of women who apply for small-business loans only to be asked for a husband's signature.

Minority-owned firms represent 21% of those in the U.S. and get 31% of all Small Business Administration-backed loan dollars. Women-owned firms get 15% of SBA loan money. Of Recovery Act-funded loans, women received 18% of the $22.1 billion total, according to SBA spokeswoman Hayley Matz.

The chamber also says women lack access to federal contracting dollars. Women take 3.4% of the total. While many large corporations make a point of publicizing partnerships with women-owned firms, they often don't disclose the size of the deals, leading the Women's Chamber to surmise that such partnerships are often little more than publicity stunts without much money behind them.

The SBA's Matz notes that the organization has been pushing to implement a women-owned small-business contracting rule, which would increase the chances of women-owned businesses receiving federal contracts. Such a rule was mandated under the Clinton administration, but has yet to be put into effect.

"It languished under the last administration," Matz says. "It is a top priority for this administration. Making it easier for women to access those contracts will be a step in the right direction for women entrepreneurs." The SBA expects the rule to go into effect by the end of the year.

-- Reported by Carmen Nobel in Boston.


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