Bias against women wanting to set up their own businesses has not improved in 15 years, according to research which shows that men still account for three in four of the self-employed.
While the proportion of British female entrepreneurs has remained static since the early 1990s, self-employment among women in the US has soared to 40 per cent of the workforce.
Now the Economic and Social Research Council (ESRC) says that banks and small business advisers need to be re-trained to help remove the financial barriers that prevent women from developing successful companies.
Professor Fiona Wilson, at the School of Business and Management at Glasgow University and one of the report’s authors, said: “Gender really does permeate and affect women’s experience of business ownership. Our observations suggest that because of differences in age and industry experience, women can be viewed as possessing significantly less human and social capital prior to setting up their businesses than men.”
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Proportion of women unchanged
Although the number of self-employed women has risen slightly since 1992, from 899,000 to 962,000, the proportion of female entrepreneurs has remained at 26 per cent.
The Federation of Small Businesses (FSB), which conducts its own biennial survey of members, says that the number of female wholly-owned and co-owned firms has fallen over the past two years.
Matthew Knowles, spokesman for the FSB, said “Lenders tend to have a formula or rigid structure to determine loan applications and often small firms do not fit that mould. Our surveys have found that women-owned businesses are more likely to be home-based or work part-time. This means that they are even less likely to fit the rigid requirements laid down by most business lenders.”
Banks insist that they treat men and women loan-applicants in the same way but the ESRC disagrees. The report stated: “The research suggested that lending decisions by individual bank loan officers can reflect biased gender perceptions and opinions. It also found that bias is just as likely among male and female officers.”
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“I ended up taking my husband along”
Angela Russell, 39, discovered the prejudice against women loan applicants when she was seeking finance for her new business venture.
Frustration at finding food for her eldest daughter, who has a nut allergy, led her to establish It’s Nut Free, a company which makes a range of foods suitable for allergy sufferers. Today the firm exports its products around the world but when Mrs Russell initially approached her bank, she discovered it was an uphill struggle.
“I didn’t expect to find it difficult,” she said. “But the bank’s attitude was such towards me that I ended up taking my husband along to meetings. Then the bank’s attitude changed. It was simply the fact that my husband was a man.
“Maybe I had made things more difficult for myself. I started the business in my kitchen so I then found it more difficult with male bank managers and male business people who I think saw me as a mumsy type and not someone who really wanted to start a business.”
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Dr Francis Green, a lecturer in entrepreneurship at Warwick Business School, believes there are a variety of explanations for why women are not going into self-employment in greater numbers.
He said: “One is that previous research has found that there is an association between education levels and self-employment. Women are more likely to be self-employed if they have higher levels of educational attainment.
“Second, most of the self-employed are in trades so given that this is dominated by men, it is not so surprising that women are less likely to be represented amongst the self-employed.”
Women are penalised
Women who are granted start-up loans from banks are penalised, the ESRC found. “Other recent research has found that female-owned businesses pay a 1 per cent higher rate relative to male owned businesses,” Professor Wilson said.
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She added: “While we did not find that banks deliberately discriminate against women, there is enough evidence to show that women business owners may not feel terribly confident that they will get a good deal from the banks.”
A spokesman for NatWest said: “At no point does gender play a part in our lending decision making process. We assess any applications on the customer’s ability to service the debt, their credit history and the viability of the business idea and plans. As the ESRC report itself admits, there is no evidence to suggest that banks deliberately discriminate against women business owners.”