Financing appears harder for female business owners

Almost 40% of all business owners in the Netherlands are women, yet they receive less than 15% of all business funding; a gap of nearly 25 billion euros. They apply for funding less often, and when they do, the amounts involved are also lower.

Recently, KVK conducted research into entrepreneurs’ expectations when applying for funding. Among other things, this revealed that women are more likely to dread the application process, expect more obstacles, and are less sure where to start when looking for funding. But why exactly is this the case? And what are the most striking differences between men and women in this area?

A challenge for everyone

Carolien Babonnick, a research specialist and analyst at KVK, was involved in this study. ‘One of the things we see is that applying for funding is still difficult for everyone. Both men and women find it challenging, and that has actually been the case for years,’ she says of the findings. ‘But,’ she continues, ‘that doesn’t mean there aren’t any differences. For example, we see that 2 in 3 women expect in advance that it will be very difficult to secure suitable funding, whereas this applies to almost half of the men surveyed.’

Social value causes doubts

There are several reasons for this. One of the main practical reasons lies in the nature of the businesses: women are relatively more often active in sectors focused on sustainability and social impact. For example, healthcare, welfare, education, and sustainability. These are sectors that have significant social value, but in traditional financing models they are often assessed as less profitable. Financiers therefore believe there is less money to be made, and so it is harder to secure funding if you run a business in one of these sectors.

This is reflected in the questions financiers ask, Babonnick notes from international research. ‘Men are asked more promotion-oriented questions and women more prevention-oriented questions. This means, for example, that financiers ask men about potential growth and their ambitions, while they are more likely to discuss risks and caution with women.’

Uncertainty and insecurity

This approach has an impact. Babonnick says: ‘We see in the research results that women prepare more thoroughly: they delve into the risks and want everything to be in order before they submit an application. That makes sense, but sometimes makes it harder to actually take the plunge.’

‘Entrepreneurship always involves a certain degree of uncertainty, but if something goes wrong, women seem quicker to look at themselves,’ she explains. ‘Women are more likely to attribute the cause of a potential rejection to themselves: their plan, their knowledge, their preparation. Men, on the other hand, are more likely to attribute uncertainty to the bank or the system. That difference in self-perception is clearly reflected in their explanations.’

A fairer systeem

The problem is that these doubts do not come out of thin air. When women are treated differently as a matter of course, both within their network and at the financing table, it is not surprising that they often view themselves and their plans more critically. The question is therefore not only how women can gain more self-confidence, but also how the system can be made fairer.

The most important step here is to raise awareness, both among women who experience insecurity and among financiers, says Babonnick. ‘It is important to acknowledge these differences between men and women. On the one hand, this helps to focus the conversation more on opportunities rather than risks. On the other hand, it makes financiers more aware of any prejudices they may still hold or the way in which they react differently to men than to women.’

Ultimately, it remains a difficult process for both men and women. ‘So many new forms of financing have emerged that are not yet widely known, but which do offer opportunities. You just need to be aware of them.’

It is true that finding suitable financing for your business is complicated for everyone. But the figures show that the underlying reasons for women are different from those for men. Recognising these reasons is the key to change.

The Financing Guide

One way to lower the barrier is to know what is possible. Are you an entrepreneur looking for financing options for your business? Take a look at the Financing Guide. There you will find more information about the various forms of financing, which one best suits your situation, and where you can go for help and support.