WOMEN are more likely than men to repay small business loans on time but struggle to access traditional funding, according to new research.
In total, women are 18 per cent more likely to pay back small business loans on time compared to their male counterparts, according to alternative business lender Iwoca.
Iwoca’s data scientists calculated gender-based statistics on loan repayment rates by checking customer application forms for people with female titles and then compared the approximate default rates with applicants with male titles.
Iwoca carried out the data analysis in response to a study by the Federation of Small Businesses (FSB), which found that a quarter of female small business owners cite the ability to access traditional funding channels as a key challenge, with many relying on alternative sources, such as crowdfunding, personal cash and credit, for growth.
“More can be done to narrow the entrepreneurial gender gap in the UK,” said Christoph Rieche, co-founder and chief executive of Iwoca. “Making it easier for women to access business funding would go a long way to achieving that.”
Women-led small businesses make up an estimated 20 per cent of Iwoca’s customers and it has supported an estimated 2,400 women business owners in the UK with almost £50m in lending since its launch in 2012.
Rieche added: “Sadly, the reality is that banks are withdrawing critical finance from across the entire small business sector and unless the government takes action to encourage greater competition that will allow alternative providers to fill the hole, women will continue to be at a greater disadvantage from an unfair system, regardless of their higher propensity to repay on time.”
Lending to the UK’s small- and medium-sized enterprises has shrunk by 9.5 per cent in the last three years, according to UK Finance data cited by Iwoca. This compares to a 9.6 per cent growth in consumer lending year on year in October 2017.