The gender gap in business finance and lack of cash flow continues to hinder the growth and ambitions of women-owned SMEs (small to medium enterprises), according to new research.

According to the study conducted by Bibby Financial Services (BFS), only 49 percent of women business owners have stable cash flow that meets their needs, a significantly lower rate than 66 percent of males. It is also reported that 43 percent of female business leaders lack cashflow for expansion, highlighting a 14 percentage point gap compared to their male counterparts.

Gender Confidence Gap in Business

Women are less confident in the finances of their companies than men in the UK, indicating that a confidence gap exists among them. Nearly half (48 percent) of female business leaders surveyed expressed concern about their ability to repay loans if interest rates continue to rise, while only 32 percent of their male counterparts expressed the same concern. The recent rise in interest rates continues to impact profit margins and cashflow capabilities.

Gender Gap in Business Finance

Lucile Flamand, chief strategic development officer of Bibby Financial Services, comments on the situation: “An uneven playing field of institutional barriers and entrenched stigmas have a significant impact on female-led businesses, and it is unsurprising that this is reflected in a confidence gap between women and men.

“Even in 2023, it’s still much harder for female entrepreneurs to access funding than it is for their male peers. In fact, women business owners receive less than half of the investment capital of their male counterparts, despite delivering twice as much revenue per dollar invested.”

Difficulty Accessing Funding

The gender investment gap remains a significant challenge for women business owners to access funding, which goes beyond a lack of confidence. According to the Alison Rose Review of Female Entrepreneurship for 2023, 50% of female business leaders reported difficulty obtaining funding and investment in the past year, compared to 40% of male business leaders.

In BFS’ research, 62 percent of female SME leaders claim that securing a business loan has become harder compared to pre-pandemic, compared to 57 percent of male business leaders.

In spite of the gender equity funding gap and these challenges for women in business, female entrepreneurs remain motivated and determined, as demonstrated by the record number of female-owned businesses founded in the UK last year.

Flamand emphasises the importance of supporting women-owned businesses and ensuring that access to finance is not a hindrance to their success.

“Women business owners have so much potential to bring new ideas and exciting businesses into the world,” she said: “So, now, it is more important than ever to make sure that we keep fighting the good fight – recognising both the opportunities and challenges for women-owned businesses, and ensuring that access to finance is not one of them.”

You can explore the full SME Confidence Tracker report for greater insight into the resilience and challenges businesses face today.