Government to Review Why Women are Held Back in Business
Perhaps thanks to The Telegraph’s campaign lobbying the Government to boost female entrepreneurship in Britain, the Government announced its first ever “serious review” into the funding gap that prevents women from becoming business leaders in Britain. In this blog, our chief executive, Katy Ford, shares some positive news about how Foundation East, the only responsible finance company offering business support to SMEs across the East of England, has been helping female entrepreneurs over the last three years, and how these women have proven our lending decisions to be wise.
Just one day after 200 business leaders, entrepreneurs and MPs signed an open letter published in The Telegraph urging the Government to put money aside to boost female entrepreneurship, the Government ordered the first ever “serious review” into the funding gap preventing women from becoming business leaders in Britain.
This funding gap is more than just a ‘women’s issue’, as our female clients’ successes demonstrate; this funding gap has an impact on the UK economy as a whole.
What are the facts about the funding gap that prevents many women from starting their own businesses?
- Women Mean Business reports that only 9% of all UK start-up money goes to women-led businesses each year, despite women owning 33% of businesses in Britain and a further one in eight wanting to become entrepreneurs
- The Federation of Small Businesses reports that Britain is missing out on more than 1.2 million new enterprises due to the untapped business potential of women
- Deloitte estimates targeted help for female founders could provide a £100 billion boost to the economy in the next 10 years
- The Telegraph reports that female entrepreneurs have to battle unconscious bias in pitching rooms, struggling to get their ideas taken seriously by predominantly male investors, and that women comprise just 13% of decision makers in UK venture capital and 27% of the venture capital labour force
- The Entrepreneurs Network reports that men are 86% more likely than women to be venture capital funded and 56% more likely to secure angel investment while women consistently receive fewer and smaller bank loans for higher interest rates than men
Behind these statistics, of course, are human stories. We know, because many of the women who are refused access to finance across the East of England turn to us. Indeed, over the last three years, we have lent £1,495,298 to 103 women-led businesses. That’s 48% of our total lending by value. We’ve been lucky in having this rich stream of women-led businesses as clients. Our sector does not specifically target female entrepreneurs, so many come to us because they’ve failed to access finance from more mainstream sources. We do not decide to lend to and support these women because they are women. Our lending and business support decisions are based on our belief in the applicants’ business plans and their ability to help save and create jobs. We’re about inclusive finance, so many other outcomes are achieved too, for example, as well as increasing the availability of finance to women-led businesses, we’re increasing access to finance to:
- Start-up businesses
- Ethnic minority people
- Disabled people
- People younger than 25 and over 50
- Parts of the more difficult to access part of the rural eastern region
- Areas determined as deprived
- Businesses with no security to offer
- Lever in other funds
Other responsible finance providers have success stories about supporting women-led businesses too, some of which are shared in Responsible Finance’s, our membership body’s, blog. We, like them, are proud of the role we play in helping women entrepreneurs have access finance to achieve their dreams. Here are just a few examples of some we have supported.
What are the human stories behind the funding gap?
Sara Horsfall could not have established Ginibee, an online talent matching platform that helps businesses to access and retain diverse talent by accelerating the process of creating full-time job sharing roles (‘talent partnerships’) without our support.
“Traditional bank lending criteria simply didn’t consider the factors a mission-led business has to contend with, but the approach and evaluation process at Foundation East gives businesses like Ginibee a chance,” commented Sara.
Since taking our loan, Sara has gone on to build and launch the matching platform, which has over 300 users. Ginibee has assisted over 60 talent partners into full-time roles, enabling organisations to access and retain crucial talent, reduce attrition and provide a supportive way for returners to re-enter a career.
Mona Shah may not have been able to grow her multiple award-winning social enterprise, Harry Specters Chocolate, without a loan from us. Harry Specters makes and sells award winning chocolates and provides free training, work experience and employment opportunities for people on the Autistic Spectrum. Since launching in 2012, this organisation has provided training and work experience to 183 autistic people, enabling them to produce great products and is employing 4 full-time and 5 part-time employees (6 of whom are on the autistic spectrum). The business plans to double revenues in the next 2 years in order to create more employment for people with autism. Quite an achievement.
There are others too: Dawn Giesler of Scuseme, Kerry Kavanagh of Perk Coffee, Nicola Harris of George James Bridal, Laura Morrison of Your Telemarketing and Kathryn Berale of environmentally aware hair studio, Cabello, to name but a few.
What is our experience of supporting women-led businesses?
Women-led businesses already contribute over £75 billion to the UK economy, yet less than one in five of businesses are majority run by women. If women were to set up and grow business at the same rate as men, the Government estimates it could add £600 billion to our economy. Indeed, Robert Jenrick, Exchequer Secretary to the Treasury, told The Telegraph that “The greatest economic opportunity out there today is harnessing the talents of women that are currently untapped.”
We’ve certainly found this to be true. The majority of our female entrepreneurs pay us back on time, create economic and social impact in the region and go on to be able to access mainstream funding. We’re pleased that the Government is finally taking serious measures and trust its report will lead to a levelling of the playing field to help women entrepreneurs more easily access the finance they need to set up and grow their businesses.
Foundation East supports people with viable business plans. Ownership of assets with which to secure a loan, credit history, gender or background should not be an obstacle to securing finance. If you have a viable business plan you can apply for a loan here.