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The glass ceiling still looms above for women business owners in the U.S.

A Kiva loan helped Tennille scale her vegan pet brand and continue to improve the lives of senior dogs in need.

Small business ownership and access to capital remains gendered in the U.S. 

Despite facing gendered obstacles throughout their business ownership journeys, like unequal access to finance and concentration in lower paid industries, women continue to see business success and are more likely to repay their loans. 

In the United States, progress is being made in some respects when it comes to gender equality. Women have overtaken men to now account for more than half (50.7%) of the college-educated labor force in the U.S. 

But women still experience inequities in several arenas, including in access to financial services. 

One in 10 adults in the U.S. say they do not have a checking or savings account, and unbanked consumers are more likely to be women (60% vs 40% men). Women are also more likely to cite someone else in their household having a bank account as a reason why they don’t have one, which suggests that they are not the primary financial decision-maker in their household. 

For business owners, there is also a gender gap in access to capital, with women significantly less likely to receive the loans that they apply for and more likely to face funding gaps. Not only that, but women entrepreneurs still face a wage gap. While this can be largely attributed to the sectors in which they start a business, systemic barriers and traditional gender expectations oftentimes influence which sectors are open to women entrepreneurs.

With data from the last 14 years of Kiva U.S. loans and other data on financial access, we see sobering trends in financial inclusion for women in the United States and a few areas to invest in further success. 

Women find it harder to access capital

Women are starting businesses at record rates. In 2020 and 2021, new business owners were much more likely to be women than prior years, reaching 49% in 2021 compared to just 28% in 2019.

But women believe that they have fewer financial options for their businesses relative to men. When a recent survey conducted by 60 Decibels asked what would have happened to their business if they had not received a Kiva loan, 66% of Kiva borrowers who were men said they would look for other sources of capital, while only 50% of women borrowers reported that as an option.

Data from the New York Fed’s Small Business Credit Survey shows that women-owned firms apply for credit at a similar rate to men, but non-applicants are more likely to be discouraged from applying for financing for fear of being turned down (22% of women-owned businesses vs. 15% of men-owned firms).

Unfortunately, when it comes to traditional sources of capital, women’s lack of confidence in their ability to access funds is often warranted. Although women-owned businesses applied for loans at a similar rate, less than half (47%) of their loans were approved, compared to 61% of firms owned by men. And even among businesses with low-credit risk, women-owned firms were less likely than firms owned by men to receive all of the funds they requested (48% vs. 57%).

It’s not surprising, then, that women-owned businesses are more likely to face a funding gap, with not enough money to fund the ongoing operations or future development of their businesses (64% vs 56% of men-owned firms). 

Kiva seeks to address this gendered access to capital by making more loans available to women entrepreneurs. More women sought loans through Kiva U.S. than men in 2022 and this continues to trend upwards, with 71% of all Kiva U.S. loans in 2022 going to women (up from an all-time number of 63% since we started lending in the U.S. in 2009). 

When they do seek capital, women ask for less

Lack of confidence in their ability to access finance may be a reason that women generally seek less capital than men when they are starting or growing their businesses. 

In 2022, the average Kiva loan size for women was 6.2% lower than the average loan size for men. For BIPOC women entrepreneurs, this gap in the amount of capital sought is even greater, with BIPOC women taking out 12% less than non-BIPOC women and 9% less than BIPOC men. 

We still have work to do to help women reach gender equality in loan sizes, but relative to broader statistics from more traditional finance institutions — where the average loan size for women-owned businesses was 33% lower than for men-owned businesses in 2020 — we are heading in the right direction.

The capital provided through Kiva loans helps women grow or run their business, with three in four borrowers indicating that their business outlook has improved since engaging with Kiva. And sometimes even more importantly, it can help them access more funds from larger institutions after they repay their initial loan. 69% of Kiva borrowers feel confident about accessing additional capital, compared to 49% of those who did not get a Kiva loan. 

Women entrepreneurs are primarily concentrated in lower-paid sectors 

As well as finding capital more difficult to access, women entrepreneurs face a continued and large wage gap — not for lack of success in their chosen field, but because the field itself is lower paid. 

Data from the World Bank shows that women who enter male-dominated sectors earn 66% higher profits than women who remain in traditionally female-concentrated sectors. Despite this, women tend to start businesses in fewer and less profitable sectors than men, possibly due to systemic barriers that traditional gender expectations place on women.

U.S.-based loans through Kiva reflect this gendered sectoral segregation, with women much less likely to take loans for traditionally male-dominated sectors like construction, transportation, and technology, and much more likely to borrow for businesses in child care, cleaning services, and jewelry. 

This sectoral segregation is also one reason that women face difficulty accessing finance, with women gravitating to fields that investors are less likely to back, like retail or hospitality. While we can see continued progress in women moving to less traditional sectors, Kiva helps to fill ongoing funding gaps, with top loan activities for women in the U.S. featuring services, food production/sales, cosmetics sales and retail.

Helping women break into more male-dominated sectors can improve earnings

Kiva data shows that in some of the sectors dominated by men like manufacturing and construction, women had lower repayment rates for their loans compared to other sectors. This suggests that there is still work to do to help women succeed in breaking through to these industries, beyond providing access to finance. 

Through Kiva’s Hub model, we have found that when borrowers have access to non-financial resources alongside their loans, they report greater business improvements. A Kiva Hub is a local organization that invests in economic inclusion and the success of small businesses in their community. Through connecting their clients to Kiva’s loan product, they are able to broaden their reach. Our partnerships with Kiva Hubs have enabled us to increase the number of loans we fund to systemically marginalized communities. In 2022, 83% of Kiva Hub-facilitated loans went to BIPOC borrowers, and 56% of Hub-facilitated loans went to BIPOC women.

Borrowers that are associated with Hub organizations are provided with business services such as access to training sessions and information on how to access additional financial resources. When compared to non-Hub Kiva U.S. borrowers, Hub borrowers were:

  • 43% more likely to say their business outlook has very much improved after their Kiva loan,

  • 6% more likely to say their repayments were not a financial burden,

  • 12% more likely to be highly satisfied with their Kiva loan, and

  • 80% more likely to report that their Kiva loan helped them to secure additional sources of financing.

Women experience gender gaps in wages, funding, confidence — but not success 

Despite the hurdles in accessing capital and more work to do to help women succeed in higher paid industries, there are signs of success.

The myth that women constitute a riskier segment of entrepreneurs to invest in has been proven false time and again by Kiva’s work. Women were 16% more likely to repay their loans than men in 2022, a fact that is all the more impressive given the disproportionate impact of the COVID-19 pandemic on women entrepreneurs, particularly those in the services sector.

In 2020 and 2021, both women’s and men’s repayment rates declined due to the effect of COVID-19 on businesses. In the services sector, repayment rates for women fell 6.5% in 2020 and another 26% in 2021. But while men’s overall repayment rates continued to decline in 2022, women’s repayment rates improved by 9% versus 2021.

 “Someone believed in me. The best way to keep that belief is to pay it back.” – Woman, Kiva Hub Borrower, from the 60 Decibels report. 

And it doesn’t stop with repaying loans; data suggests that women-led businesses have a better return on investment than businesses owned by men. For every $1 of investment raised, women-owned start-ups generated 78 cents in revenue, versus 31 cents generated by male-owned companies.

Individuals support women entrepreneurs by addressing their need for capital

While traditional financial institutions have more work to do to adapt their funding in light of women’s success in business and higher propensity to repay, Kiva has always seen women entrepreneurs as people to believe in.

And many Kiva lenders agree. Alexia, for example, was curious who applied for Kiva loans in the United States, so she clicked on Charise’s profile

“I felt very compelled by her story,” she explains. “She's a woman of color and she is serving a traditionally underserved population in an area that has few mental health professionals, expanding care to people. I felt like that was really important.”

Take a look at loans to women in the U.S. here

*Kiva understands that gender is not always binary. For the sake of this report, we focused on data that compared women to men. We are glad to have launched the ability for Kiva U.S. borrowers to identify as non-binary on their applications in late 2022, and look forward to learning more about the loan behavior of this demographic in the future.


Icon credits:
Transportation by Amelia from Noun Project Cosmetic Brush by Bakunetsu Kaito from Noun Project build by Manglayang studio from Noun Project clothing by GreenHill from Noun Project Price Tag by NAPISAH from Noun Project Software by zahrotul fuadah from Noun Project

About the author

Sophie McAulay

Sophie is Senior Content & Community Manager at Kiva, and is passionate about economic development, reducing income inequality, and equality of opportunity. She helps Kiva tell stories of the impact of microfinance on individual's lives.