1.4 The “Discouraged Applicants”: Barriers for Women Entrepreneurs
3 MIN READ
Imagine being an entrepreneur or an aspiring entrepreneur and having to face so many obstacles that you wonder if pursuing your entrepreneurial dream is worth it. For many women entrepreneurs, or aspiring entrepreneurs, this is often the sad reality.What Does “Discouraged Applicant” Mean?
Women entrepreneurs or aspiring entrepreneurs face barriers that may limit their access to financing. The term “discouraged applicant” refers to women who, for various reasons, decide not to apply for financing. With all the obstacles that lie ahead, it’s perfectly understandable that women entrepreneurs would become “discouraged applicants.”
The 5 C’s of Entrepreneurship
Experts believe that to succeed as an entrepreneur, you must gain access to several types of interconnected capitals. The following are five types of capital that are essential to entrepreneurs:
- Financial capital: funding, programs, etc.
- Economic capital: economic networks, transportation (goods/merchandise), exports, taxation, etc.
- Social capital: education, communities, networks, mentors, organizations, entrepreneurial relationships, etc.
- Human capital: entrepreneurial characteristics, financial literacy, financial confidence, personal experience, financial acumen, attitude, motivation, etc.
- Family capital: families, life partners, children, friends, etc.
Unfortunately, women face more obstacles than men, so gaining access to the 5 Cs of entrepreneurship is often challenging for women entrepreneurs or aspiring entrepreneurs; it is therefore essential that they gain access to those types of capital.
Barriers for Women Entrepreneurs
In comparison to men, women entrepreneurs face many obstacles that may prevent them from gaining equal access to financing.1
Biases and Stereotypes2
As we all know, everyone may be prone to conscious or unconscious biases and stereotypes. This can be a significant barrier to women entrepreneurs seeking financing.
- Unconscious biases
- Gender-based stereotypes
- Cultural and social norms
Access to Information3
For many women entrepreneurs or aspiring entrepreneurs, obtaining information on certain aspects of business financing may be difficult.
- Lack of clear information on business financing
- Lack of assistance when gathering information on financing
- Difficulty finding financing/support programs
- Doubts as to expectations and financing criteria
Loan Practices and Policies4
Loan practices and policies may also pose significant challenges to women entrepreneurs.
- Disqualifying factors for financing (credit history, insufficient collateral, lack of experience, etc.)
- Relationships between women entrepreneurs and lenders/lending institutions
Distinct Features of Women Entrepreneurship5
Women entrepreneurs and their businesses often have unique characteristics. If misunderstood or disregarded, these characteristics may become barriers.
- Specific characteristics of women-owned businesses (e.g. business size, years in operation, organizational structure, regional trends, etc.)
- Operating sectors (e.g. retail, hotel, food, tourism, etc.)
- Business intent and motivating factors
- Entrepreneurial risks and adversity
- Growth, innovation and export potential
- Life circumstances (e.g. maternity, division of housework, access to childcare, etc.)
Diversity6
Many women entrepreneurs come from underrepresented groups, which means they may face additional obstacles.
- Indigenous women
- Racialized Women
- Immigrant Women
- LGBTQI2SA+ Women
- Women with a disability
- Women in rural and remote areas
Financial Literacy7
In terms of entrepreneurship, a reasonable level of financial literacy (i.e. financial confidence, skills and knowledge) may play a key role. At times, women entrepreneurs face barriers that may affect their understanding of financial literacy issues.
- Level of financial confidence and knowledge
- Shortcomings of educational systems
- Lack of access to training, coaching, mentoring and networking
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References
1If you are interested to learn more about one or more of these barriers, we invite you to read the numerous tools that we have produced.
2For more information about this barrier, see tool # 2.
3For more information about this barrier, see tool # 3.
4For more information about this barrier, see tool # 4.
5For more information about this barrier, see tool # 5.
6For more information about this barrier, see tool # 6.
7For more information about this barrier, see tool # 7.
2For more information about this barrier, see tool # 2.
3For more information about this barrier, see tool # 3.
4For more information about this barrier, see tool # 4.
5For more information about this barrier, see tool # 5.
6For more information about this barrier, see tool # 6.
7For more information about this barrier, see tool # 7.
Disclaimer
All documents prepared for the LEADING LENDERS project were developed in line with the most appropriate and recent terminology. However, we recognize that terminology is subject to change over time. To the best of our ability, we have attempted to use terminology that respects the dignity and rights of all individuals.
All documents prepared for the LEADING LENDERS project were developed in line with the most appropriate and recent terminology. However, we recognize that terminology is subject to change over time. To the best of our ability, we have attempted to use terminology that respects the dignity and rights of all individuals.
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