Financing Profile: Women Entrepreneurs (October 2010)

Intended use of debt financing

Majority female-owned firms were more likely to use debt financing for working/operating capital than majority male-owned firms

Although majority female-owned firms were just as likely to seek credit financing as majority male-owned firms in 2007 (Table 5), the intended use of the requested financing differed substantially between the two gender groups. As revealed in Table 9, 72 percent of debt-seeking majority female-owned firms intended to use the financing for working capital compared with 56 percent of majority male-owned firms.

Table 9
Intended Use (%) of Debt Financing, 2007*

	Majority Female-Owned	Majority Male-Owned
Source: Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2007. * Bold value denotes statistically significant gender difference at 5 percent. ** Represents the first four categories; SMEs often seek multiple types of fixed assets.
Land and Buildings	17	12
Vehicles / Rolling Stock	9	19
Computer Hardware and Software	8	7
Other Machinery and Equipment	22	31
Fixed Assets**	37	53
Working Capital / Operating Capital	72	56
Research and Development	5	3
Debt Consolidations	25	7
Intangibles	9	3
Purchase a Business	12	7
Grow the Business	53	34
Other Purposes	19	13

Notably, female business owners were significantly more likely to use debt financing to help grow their businesses than male business owners (53 percent versus 34 percent respectively). Majority female-owned firms were also far more likely to use the financing for debt consolidation. On the other hand, majority female-owned firms were less likely to allocate financing to fixed assets, such as vehicles and rolling stock. This may be due to the fact that majority female-owned SMEs are less likely to be goods-producing industries, such as manufacturing, which may, in part, explain why the average approved amount of financing was significantly higher for majority male-owned firms than majority female-owned firms (Table 7).