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Gender Gap in Business Finance: Women-Owned SMEs Face Cashflow Challenges

Cashflow challenges continue to plague women-owned SMEs, hindering their growth and ambitions, according to research conducted by Bibby Financial Services (BFS).

The study reveals that only 49 per cent of women business owners report stable cashflow that meets their needs, a significantly lower figure compared to the 66 per cent of male respondents. Additionally, 43 per cent of female business leaders admit to lacking the cashflow required for expansion, highlighting a notable 14 percentage point gap compared to their male counterparts.

This disparity indicates a confidence gap between female and male business owners in the UK, particularly concerning their company’s finances. With the recent interest rate rise further impacting profit margins and cashflow capabilities, nearly half (48 per cent) of female business leaders surveyed express concerns about their ability to repay loans if interest rates continue to increase, while only 32 per cent of their male counterparts share the same worry.

Lucile Flamand, chief strategic development officer of Bibby Financial Services, comments on the situation: “An uneven playing field of institutional barriers and entrenched stigmas have a significant impact on female-led businesses, and it is unsurprising that this is reflected in a confidence gap between women and men.

“Even in 2023, it’s still much harder for female entrepreneurs to access funding than it is for their male peers. In fact, women business owners receive less than half of the investment capital of their male counterparts, despite delivering twice as much revenue per dollar invested.”

Difficulty accessing funding

Access to financing remains a considerable challenge for women business owners, extending beyond just a confidence issue. The 2023 Alison Rose Review of Female Entrepreneurship revealed that 50 per cent of female business leaders encountered difficulty accessing funding and investment in the past 12 months, compared to 40 per cent of their male counterparts.

BFS’ research further reinforces this trend, as 62 per cent of female SME leaders assert that securing a business loan is now more challenging compared to pre-pandemic, compared to 57 per cent of male business leaders.

Despite these obstacles, female entrepreneurs remain motivated and determined, as evidenced by a record 150,000 new firms founded by women in the UK last year. However, the statistics emphasise the need to continue leveling the playing field.

Flamand emphasises the importance of supporting women-owned businesses and ensuring that access to finance is not a hindrance to their success.

“Women business owners have so much potential to bring new ideas and exciting businesses into the world,” she said: “So, now, it is more important than ever to make sure that we keep fighting the good fight – recognising both the opportunities and challenges for women-owned businesses, and ensuring that access to finance is not one of them.”

The full SME Confidence Tracker report is available for further exploration, shedding light on the resilience and challenges faced by businesses during these uncertain times.


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