A recent investigation by Bibby Financial Services (BFS) has revealed a concerning trend in commercial lending, with women business leaders facing significant hurdles.
The BFS’s SME Confidence Tracker, which gathered responses from 1,000 UK SMEs, indicated that 66% of women leaders believe banks have become more hesitant to lend to their businesses.
This reluctance comes at a time when corporate insolvencies have soared to a 30-year high in England and Wales, with over half of all SMEs experiencing the insolvency of a supplier or customer failure in the last six months.
However, women-led businesses report a lower incidence of administration compared to male-owned businesses, suggesting a discrepancy in perceived versus actual risk.
Lucile Flamand, chief strategic development officer at BFS, pointed out the economic potential of reducing gender disparity in business financing. “According to the Rose Review, £250bn in value could be added to the UK economy if women matched the number of men starting and scaling a business,” she said, stressing the importance of equitable access to finance.
Roxanne Goodman, founder of Female Founder Finance, highlighted the discrimination in lending practices. “Women-founded businesses are less likely to face insolvency, and typically want to borrow less than male-owned enterprises, but there seems to be a distinct lack of appetite from lenders to back these businesses,” Goodman remarked. She noted the inappropriate questioning of women about their care responsibilities, a scrutiny not applied to male borrowers.
The findings also underscore the broader economic challenges faced by female SME owners, such as high interest rates and energy costs. These factors are seen as major impediments to entrepreneurship, with 60% of women indicating that the economic environment is quashing entrepreneurial spirit.
