Recent headlines have celebrated the success of women chief executives at Facebook, IBM, General Motors and other corporate giants. But this misses a much bigger story: women-owned small businesses - already numbering nearly 10 million - are starting up at twice the rate of men-owned businesses, and they are succeeding despite an all too real glass ceiling. At the same time, women in Congress are leading the legislative fight to crack that glass ceiling and level the playing field for women-owned businesses.
As the lead Democrat on the Senate's Small Business Committee, I've had countless conversations with businesswomen from across the US. They are proud to be successful business owners and job creators. But they tell disturbing stories of barriers confronting women entrepreneurs that aren't encountered by their male counterparts. They face longer odds in getting access to credit and capital, winning government contracts, and accessing the business counseling they need to succeed.
In a Harvard Business School study, potential investors watched two videotaped entrepreneurial pitches, one with a voiceover using a man's voice and the other using a woman's voice. The content of the pitch was identical; the only difference was the gender of the person delivering it. Sixty-eight percent of the investors chose to fund the venture pitched by the man's voice, and only 32 percent chose to fund the one pitched by the woman's voice.
It is a shocking fact that, as recently as 1988, many states had laws requiring women to obtain the signature of a husband or other man in order to establish business credit.
This legacy of sexism and discrimination partially explains why women, today, receive just 7 percent of venture capital funds, and why women-owned small businesses secure less than 5 percent of federal government contracts and account for less than 5 percent of the total value of all conventional business loans.
The good news is that big changes are underway, led by women in Congress in concert with organizations such as Women Impacting Public Policy and the Association of Women's Business Centers.
In July 2014, women entrepreneurs from across the country packed a hearing of the Senate's Small Business Committee to demand reforms aimed at increasing women-owned small businesses' access to federal contracts, capital and business counseling. It is unacceptable that the nearly 10 million women-owned small businesses are awarded less than five percent of federal contracts. Soon after the hearing, I joined with Senators Maria Cantwell (D-WA) and Kirsten Gillibrand (D-NY) to pass key elements of the Women's Small Business Procurement Parity Act. This law will give women-owned small businesses more opportunities to compete for federal contracts, on par with other traditionally disadvantaged groups.
Access to credit is another huge challenge facing women-owned businesses. Unable to obtain a traditional bank loan, many women rely on personal credit, loans from family and friends, credit cards, or even liquidating retirement accounts. These unstable and costly sources of financing put women-owned small businesses at a sharp competitive disadvantage.
Since most women-owned start-ups require modest capital and are up to five times more likely to be approved for a Small Business Administration (SBA) loan than a conventional loan, we passed the Small Business Jobs Act of 2010 to increase the maximum SBA Microloan amount from $35,000 to $50,000, while also creating a new Intermediary Lending Pilot Program to provide SBA loans between $50,000 and $200,000.
Our next priority is to improve women's access to specialized business counseling and training, especially in economically disadvantaged communities. More than 100 SBA-funded Women's Business Centers serve tens of thousands of clients annually, helping women-owned businesses to get off the ground or rise to the next level. For years, these centers have been hamstrung by funding uncertainty and a 1990s law that does not meet the needs of the 21st century. This month - in a fitting salute to National Women's Small Business Month - our Small Business Committee passed legislation to reauthorize and modernize this very successful program.
Forbes says that women-owned businesses have become "the nation's job-creation machine." Between 1997 and 2014, according to an American Express study, the number of women-owned firms grew at 1½ times the national average; revenue and employment growth among women-owned firms tops that of all other firms except for the largest, publicly traded corporations.
This is progress, but we must do better. The glass ceiling in small business is not only holding back women; it is also depriving our economy of vast human capital, creativity, and innovation. We need to level the playing for women in small business, ensuring more equal access to credit, capital, counseling, and contracts.
Warren Buffett famously said that one reason for his extraordinary success is that he was competing with only half of the world. It's time to fully unleash the other half.
Senator Jeanne Shaheen is the lead Democrat on the Senate's Committee on Small Business and Entrepreneurship.