In 2016, Virgin Money launched a report on ‘Women in Finance – fairness, equality and inclusion for men and women’. The report found that ‘more women than men start out in financial services but, as they progress, the majority fall out, especially at middle management level. This leaves almost all of the top jobs in the hands of men.’ It stated that ‘achieving a balanced workforce at all levels in financial services will undoubtedly improve culture, behaviour, outcomes, profitability and productivity. The reports ambitious recommendations included the need for financial service organisations to set targets, create senior accountability and link executive bonuses to gender diversity. Nearly 200 organisations across a range of different financial services have now signed the ‘Women in Finance Charter’.
That is excellent progress, although the real proof will be in how many financial service boards and senior management teams have achieved gender diversity in five years’ time.
Reports suggest that there is no longer an issue of bankers or other credit agencies in the UK refusing to provide finance to women due to prejudice. Despite this, women-led small businesses are less likely than smaller firms led by men to be using any form of external finance, including loans, overdrafts and credit cards
But there is another critical issue around finance and gender. And that is whether women are treated equally and fairly when it comes to access to finance.
In 2014, 20 per cent of single-person businesses and 18 per cent of smaller firm employers in the UK were majority-led by women. At the same time, self-employment in the UK is at the highest level in 40 years, with much of the recent growth among women.
Although some studies have pointed to on-going perception among some women that banks discriminate against them, other reports suggest that there is no longer an issue of bankers or other credit agencies in the UK refusing to provide finance to women due to prejudice. Despite this, women-led small businesses are less likely than smaller firms led by men to be using any form of external finance, including loans, overdrafts and credit cards.
The ability to access finance was highlighted by a quarter of women business owners as a key challenge to them starting their own business. Evidence has shown that women on average start their business with a third less capital than those of their male counterparts. Under-capitalisation limits enterprise growth by constraining business investments in key assets such as equipment, employees, or inventory necessary for growth. Furthermore, under-capitalisation during a business’s start-up phase can have a long-term and negative effect on business performance and growth.
Businesses set up by women contributed £3.5bn to the UK economy and created 77,000 jobs in 2015. But the proportion of the UK’s female working population starting a business was below 5 per cent, according to research by NatWest, placing Britain behind countries like Canada, the US and the Netherlands.
Responsible finance providers have a strong track record in supporting women entrepreneurs. In 2016, 55% of customers supported by responsible finance personal lenders were women (over 20,000 women). In 2017 48% were women (over 26,000 women).
Businesses funded by responsible finance providers include success stories, like Miss Macaroon, a finalist in the 2017 Citi Microentrepreneurship Awards. Rosie Ginday, Managing Director, approached BCRS Business Loans after struggling to raise finance from traditional and social lenders. Miss Macaroon is a social enterprise business that specialises in producing distinctive macaroons. As well as providing tasty treats, the company aims to help young offenders, care leavers and the unemployed by reinvesting its profits in providing training and employment through the hand baking of French macaroons. It now has two stores, opened with financial support from BCRS.
International Women’s Day is an opportunity to celebrate the huge strides that the world has made towards gender equality. Responsible Finance is proud of the role we play in making sure women entrepreneurs have a level playing field in accessing the finance they need to achieve their ambitions.