Woman power rocked business in 2015.
That’s according to a new 2016 women-owned business study by Biz2Credit, a leading online marketplace which has found that average revenues of women-owned businesses increased 12 percent in a year-to-year comparison. Average earnings also rose to $72,529 in 2015, up from $67,950 in 2014.
In comparison, businesses owned by men generated about 60 percent more revenue on average than women-owned businesses.
What’s also interesting is that there was a whopping 130 percent increase in women-owned companies seeking funding on the Biz2Credit platform, highlighting the growing popularity of woman entrepreneurship.
Good Times for Woman-Owned Companies
Several factors have contributed to the changing fortunes of woman-owned companies.
To begin with, favorable economic conditions have made it simpler for women entrepreneurs to get loans. Marketplace lenders are charging attractive interest rates and offering longer terms to benefit women-owned businesses.
What’s also worked in favor of these businesses is that mainstream financial institutions typically look at three years of credit history to approve small business loans for women, making it easier for the relatively new entrepreneurs to secure funds. On top of that, online lending portals are playing a big role in connecting borrowers to banks, micro lenders, and marketplace lenders.
Another factor that has helped women entrepreneurs thrive is the reduced startup costs. Companies no longer need invest a lot to setup their offices and hire full-time employees to grow.
“Improved economic conditions and historically low interested rates have created an atmosphere perfect for entrepreneurship, resulting in an increase of loan requests,” says Biz2Credit CEO Rohit Arora. “When the economy is strong, we notice that more entrepreneurs request funding to expand operations.”
Challenges Still Persist
Despite the growth, the 2016 women-owned business study indicates approval rates for women owned businesses were 33 percent lower than the rates for businesses owned by men. A major factor that would have contributed to the low approval rates is the average credit scores for women owned companies that remained stagnant at 600 in 2015.
Arora says, “There are many factors that come into play when considering loan approval rates, a business’s track record of revenue and credit scores are among the most important, so it isn’t too surprising that loan approval rates for women-owned businesses were lower.”
Arora feels there is a substantial gender gap that still exists, but it’s fast narrowing. That’s why it’s important to encourage more women entrepreneurs.
For the 2016 women-owned business study, Biz2Credit analyzed more than 35,000 applications from small business owners on its platform during 2015. You can view the key findings in the infographic below: