Some of the challenges faced by women-owned businesses were discussed during a June 8 hearing held by the House Small Business Subcommittee on Government Programs. A related hearing was held by the same subcommittee last year (see The Source, 3/26/99). Describing women-owned businesses as “a key dynamic in this nation’s present prosperity,” Subcommittee Chair Roscoe Bartlett (R-MD) highlighted “the vital nature of women’s business enterprises to the economy of this nation as a whole, and to the communities in which we live.”
Laura Henderson of the National Women’s Business Council (NWBC) told the subcommittee, “Estimates from the National Foundation for Women Business Owners show that in 1999, there were 9.1 million women-owned businesses in this country, employing 27.5 million workers…and generating over $3.6 trillion in sales.” She added: “Women are starting businesses at 1.5 times the rate of men, and today account for 38 percent of all businesses.”
Federal Contracting
Several witnesses commented on access to federal contracts. Despite a mandate that women-owned businesses should receive five percent of the federal government’s contracts for goods and services, government numbers show that goal is not being met. Ms. Henderson said, “The most recent federal acquisition statistics show that women business owners are receiving a little over two percent of federal contracts, about the same percentage we’ve received for the past five years.” She added, “If the five percent goal were to be achieved, women would be receiving contracts worth $10 billion, a $6 billion increase over what we are receiving now.”
On May 23, the Senate approved, by unanimous consent, a resolution (S. Res. 311) urging the President to support the five-percent policy by urging the heads of departments and agencies to fulfill it. On the same day, the President signed an executive order calling on all federal departments and agencies to establish a five-percent participation goal for prime contract awards and a five-percent participation goal for all subcontract awards to women-owned small businesses.
Terry Neese of the National Association of Women Business Owners (NAWBO) urged that the House approve a resolution (H. Res. 15) proposed by Rep. Sue Kelly (R-NY), which is similar to the Senate-approved resolution. The resolution was approved by the House Government Reform Committee on April 5.
Suzane Parker of Ward Global Enterprises said, “I am continually amazed that the issue of contract disparity continues to exist, especially given the approved governmental structure…designed to eradicate discrimination.” She recommended “a proactive approach to accessing government contract information and bidding” for women-owned firms.
Access to Capital Ms. Parker also discussed the challenges faced by women seeking the capital to start a business. “Businesses that should be up and running and mature are still at the starting gate because of this critical issue,” she told the subcommittee.
Because banks are hesitant to lend money to women, she said, “it is the rare case when a woman…has been able to secure financing prior to opening a business.” She added, “The typical response from a bank officer is to hand you a stack of brochures and send you on your way.” In many cases, she said, “divorced women have the additional burden of having to…explain financial decisions that a former spouse may have made, which now affect their financial standing.”
Ms. Parker said the majority of women-owned businesses are started on credit cards or with loans from friends and family members. She called for alternative lending sources “that take into consideration that many of us do not have the luxury or access to friends and family with financial resources to help us get started.”
Ms. Henderson described a tracking study conducted by the National Foundation for Women Business Owners, which found “that women-owned businesses were as credit-worthy as their male counterparts.” Despite progress in terms of access to capital, she said, “women business owners are still less likely than their men counterparts to seek credit and, when they do have credit, have lower levels.”
