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Financing Profile: Women Entrepreneurs (October 2010)
Top sources of financing
Female business owners were less likely to use multiple sources of financing to start up a business
Although financial institutions are a prominent source of external financing for all business owners, entrepreneurs seeking to create a new business tend to rely on internal financing sources to acquire capital. As shown in Table 10, personal savings was a major source of financing during start-up for both gender groups in each year surveyed. Leasing surged in popularity as a source of start-up financing among female business owners, jumping from 5 percent in 2004 to 20 percent in 2007. On the other hand, far fewer female business owners used trade credit during start-up in 2007 than in previous years. Overall, female business owners appeared to be less active in acquiring multiple forms of start-up financing compared with male business owners.
| Financing Source | 2000 | 2004 | 2007 | |||
|---|---|---|---|---|---|---|
| Majority Female-Owned | Majority Male-Owned | Majority Female-Owned | Majority Male-Owned | Majority Female-Owned | Majority Male-Owned | |
|
Source: Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2000, 2004 and 2007. |
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| Commercial/Personal Loans, Lines of Credit, Credit Cards | ** | ** | 44 | 70 | 49 | 51 |
| Credit from Government Lending Agencies | 5 | 5 | 7 | 7 | 6 | 3 |
| Trade Credit | 13 | 20 | 21 | 33 | 3 | 13 |
| Leasing | 8 | 14 | 5 | 20 | 20 | 10 |
| Personal Savings of Owner(s) | 63 | 67 | 56 | 64 | 70 | 76 |
| Loans from Friends and Relatives of Owner(s) | 14 | 11 | 6 | 10 | 9 | 7 |
| Angel Financing | — | — | 0.2 | 3 | 1 | 3 |
Unlike start-up firms, external financing was the most popular source of financing among business owners in more established SMEs
Beyond the start-up stage, external financing is the top source of financing for both gender groups (Table 11). In 2004, male business owners were significantly more likely to use external financing during operations than female business owners; however, this disparity was no longer statistically significant in 2007. While personal savings remained an important source of financing, more than half of the female business owners surveyed in 2007 indicated that they used retained earnings as a financing source. Similar to female business owners engaged in start-up, leasing became more popular among female owners in more established businesses in 2007, whereas trade credit fell out of favour, dropping from 30 percent in 2000 to 14 percent in 2007.
| Financing Source | 2000 | 2004 | 2007 | |||
|---|---|---|---|---|---|---|
| Majority Female-Owned | Majority Male-Owned | Majority Female-Owned | Majority Male-Owned | Majority Female-Owned | Majority Male-Owned | |
|
Source: Statistics Canada, Survey on Financing of Small and Medium Enterprises, 2000, 2004 and 2007. |
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| Commercial/Personal Loans, Lines of Credit, Credit Cards | ** | ** | 58 | 72 | 67 | 63 |
| Credit from Government Lending Agencies | 4 | 7 | 8 | 9 | 7 | 7 |
| Retained Earnings | — | — | — | — | 53 | 59 |
| Trade Credit | 30 | 41 | 22 | 40 | 14 | 24 |
| Leasing | 17 | 17 | 9 | 16 | 27 | 20 |
| Personal Savings of Owner(s) | 40 | 34 | 39 | 43 | 60 | 54 |
| Loans from Employees | — | — | 2 | 3 | 2 | 2 |
| Loans from Friends and Relatives of Owner(s) | 8 | 10 | 6 | 9 | 12 | 8 |
| Angel Financing | — | — | 4 | 1 | 5 | 4 |
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