Texas Women Entrepreneurs Face Loan Access Struggles

A new review of post-COVID data from the Federal Reserve System's Small Business Credit Survey finds troubling gender discrepancies in small business financing in Texas, with women-owned firms, particularly those owned by women of colour, suffering larger obstacles.

While women-owned businesses in Texas have high aspirations to increase income and hire more employees, the reality is somewhat different. Women-owned businesses have more financial hurdles on average and have more difficulty obtaining external finance. This pattern is much more prominent among women of colour who own firms, underscoring a larger issue of uneven opportunities that may stymie Texas' economic progress.

Texas has a higher proportion of women-owned firms than the national average, accounting for about a quarter of all small employers. Despite difficulties during the COVID-19 economic crisis, the number of women-owned enterprises is increasing again, accounting for more than $432 billion in annual payroll.

However, the recovery is unequal, particularly in terms of access to credit. Women-owned enterprises in Texas encountered challenges obtaining external capital in 2022, with success rates much lower than their male counterparts. Women of color had far more difficult hurdles, increasing existing disadvantages.

The findings highlight the necessity of addressing these gaps through potential solutions such as expanding access to technical support, evaluating specialized loan programs, and prioritizing more study on the subject. Despite the challenges, Texas women business owners are hopeful, with the majority forecasting revenue increase in 2023. Closing the gender gap in capital access will be critical to encouraging equitable economic growth in the state.