Firms launched by women have fewer options to obtain a loan in their first year of activity than those promoted by men, according to a report by the Bank of Spain
For economists Susan Marlow and Dean Patton, “in the market economy, the availability of financing and access to it is a crucial element in the creation, development and survival of any company.” Currently, this “crucial element” has to go through different filters that banks have established. In addition to taking into account the economic solvency of the company, banks also assess whether it is a man or a woman who requests this financing. And according to a report published by the Bank of Spain entitled «The gender gap in access to bank credit», the companies that in their founding year have a woman in charge of your address tend less to apply for a loan than those led by a man. In addition, among those who do request it, the probability of obtaining it is significantly lower than for those led by a male. This lower access to credit disappears in the following years, once the company has a history of results that it can show.
As the supervisor explains, one of the hypotheses that would explain this reluctance of women to borrow money is that “They are at greater risk” with respect to men in the foundation and development of a company. Banks tend to prefer men, since they are the ones who run the big business and are more likely to control the assets that entities seek as collateral. In this sense, the last report prepared by the consultant Oliver Wayman says that «only 20% of the members of the boards of directors (of 150 entities analyzed for the study) are women and the percentage in the executive committees is very much below, in 13% ». These data address some of the reasons why banks have little confidence in granting financing to women-run businesses.
Another hypothesis that, according to the Bank of Spain, would explain the lack of financing to women entrepreneurs is that «These do not request a loan since they anticipate the lack of concession by the entities». Banks ask women for information such as marital status, working life or if the request could involve other people, which make it less viable for women managers to access credit. For men at the head of a company, the request for this information is virtually nil. In this sense, the gender gap in the demand for financial credit remains, even, some years after the creation of the company. In this time period (after the first year of the company’s life), the probability of requesting a bank loan from women managers is between 10% and 25%.
The report also shows that women-run businesses that have been provided with funding in the same year of their creation are less likely to default than men-run businesses. This disappears in later years.
The Bank of Spain report ensures that any barrier or obstacle in the credit market can complicate the opening of a business, and even the start-up of the business. It could also cause a negative impact on the survival of the company, as well as its success. For this reason, the entity warns financial institutions that they should review the processes used to grant loans and, in turn, wonders to what extent the implementation of a new credit system could improve, for women entrepreneurs, the Access to this financing they need to get their business started.