Rebel Cole and Hamid Mehran studied data from the Federal Reserve’s Surveys of Small Business Finances (SSBFs) for the years 1987 – 2003 and published their findings in an August 2009 study titled, “Gender and the Availability of Credit to Privately Held Firms: Evidence from the Surveys of Small Business Finances.”

What they found was that female-owned firms are:

1. much smaller than male-owned firms, in terms of sales, assets, and employment;
2. younger, both in terms of the age of the firm, as well as in terms of the age of the owners;
3. less likely to be incorporated;
4. likely to have fewer and shorter banking relationships, and
5. “more likely to be discouraged from applying for credit, though not more likely to be denied credit when they do apply.”

Credit expert and author Gerri Detweiller has some interesting observations about the findings.  She says that the lessons for women who run their own businesses is clear.

“It can pay to set up your business properly. The fact that a significant percentage of female owned firms operate as sole proprietors is one clue that something is amiss. You cannot get true business credit if you have not set up a corporate structure.

“As a sole proprietor, you may be able to get a credit card with the business name on it, but your business and personal credit are one and the same. So even if you don’t need credit yet, look forward when choosing your business structure. Though you may be a small firm today, what structure best meets your future goals for growth?”

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Posted December 13th, 2009 by sherrilynne No Comments » This entry was posted on Sunday, December 13th, 2009 at 05:51 and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.