A bill just passed in the House that promises to expand the Small Business Administration’s microloan program, enabling women- and minority-owned businesses to obtain much-needed funding. The bill is being championed by Senator Kirsten Gillibrand, who spoke about its significance during a conference held in Rochester on Monday:
“Lending organizations aren’t making enough loans. And they’re not reaching enough entrepreneurs to actually reflect the population of incredibly diverse communities like the ones here in Rochester. And they’re not reaching enough women entrepreneurs.”
Women start firms with about half the capital men do, according to a 2014 study by the National Women’s Business Council, and women-owned firms get about 6% of the outside equity that male-owned firms do on average. On top of that, women receive less than 5% of conventional small business loans, even though they make up nearly 40% of all small businesses in the country.
Minority-owned American businesses are growing at a staggering rate. In 2012, minority entrepreneurs owned over 8 million – about 29% – of businesses nationwide. This was a huge increase over the 5.8 million owned in 2007. Yet, many minorities struggle to secure funding due to lower credit scores and fewer collateral assets. The US Department of Commerce found that minority-owned businesses see loan denial rates that are three times the national average.
To remedy these inequalities, the Microloan bill will raise the total limit on outstanding loans from intermediary lenders, which would allow for more loans to be made. As well, the act will also expand opportunities for hands-on training assistance.
Senator Gillibrand stated that the bill is all about “rewarding work, not rewarding bank profits. Because if we really want to fix our economy, then we need to start rewarding work again. And one of the best ways to do that is making sure that every hard working entrepreneur who wants to start a business, has the chance to do it.”
This legislation is an opportunity for women and minorities alike to overcome disadvantages and fuel their businesses.