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March 29, 2022
The findings of a 2022 Biz2Credit Women-Owned Business Study paint a dismal picture of the performance of many female-owned businesses during 2021, revealing declining revenues coupled with rising expenses.
The study further suggests that the effects of the COVID-19 pandemic in 2021 were harder on female-owned companies, many of which have been historically less well-funded compared to male-owned firms.
The study analyzed 100,000 firms from across the U.S. for the entire year of 2021 to garner insights into the financial performance of female-owned, small- to mid-sized companies. Here are the study’s key findings: • The average annual revenue for female-owned businesses posted a 4% dip while expenses went up by 3%. • The average earnings (that is, the difference between annual revenue and operating expenses) of female-owned businesses decreased by 26%. • Texas registered the most business loan requests from female-owned businesses, at approximately 10.84%. • Services emerged as the top industry in the survey, representing close to 31.93% of the female-owned companies. Here’s a more comprehensive look at the performance of female-led businesses:
When weighing the performance of female-owned and male-owned businesses for the stated period, the data underscores a larger problem: Female-owned companies posted a revenue gap, earning $199,936 less on average than male-owned firms in 2021. Further, while the average annual revenue for female-owned businesses declined by 4%, those of male-owned companies experienced a decline of only 2%. Women were outpaced by male-owned businesses in other parameters as well. For instance, their average loan size was a staggering 41% lower than the average loan size for businesses owned by men. Here are some specifics from the study:
Even Round 2 of the Paycheck Protection Program, wherein Congress appropriated $284 billion for small business COVID-19 relief, exhibits a similarly disconcerting picture of female-owned businesses. Perusing data from PPP loan applicants, the study finds that 49% of the applicants for PPP Round 2 were female business owners. But the average approved amount for these female entrepreneurs on the Biz2Credit platform was just $23,101, in contrast to $36,348 for those applicants who identified as male business owners.
By geography: Texas produced the most business loan applications from women-owned companies, followed by Georgia, Illinois, Florida, California and New York. By industry: Almost one-third of the female-owned companies that applied for business loans during 2021 were in the services industry (except public administration). Here’s a more detailed look at the related Biz2Credit figures:
Although average annual revenue for female-owned businesses dipped, one of the reasons is that women founded new startups at a higher rate during the COVID-19 pandemic. Further, the average age of female-owned businesses also declined — from 56 years old in 2020 to 45 years old in 2021.
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