The Federal Government Is Making a New Investment in Women-Owned Small Businesses
The Small Business Administration is elevating its Office of Women’s Business Ownership to report directly to the SBA administrator, raising its profile and power.
The Small Business Administration, the federal agency that supports entrepreneurs, is putting a greater focus on women business owners than ever before in the agency’s history, following two years that have decimated small businesses and brought into stark relief the barriers still facing the fastest-growing group of owners.
Women-owned small businesses, and particularly businesses owned by women of color, have been growing at the fastest clip of any group, but they also still face the most difficulty accessing capital and support.
Since it was founded in 1979, the SBA’s Office of Women’s Business Ownership has played a role in trying to support women entrepreneurs in their communities, offering training, help with federal contracts and financing support. But that role has often been second-tier to other SBA priorities, such as the Offices of Entrepreneurial Development, which currently oversees the women’s business office.
Now, as part of a new initiative first shared with The 19th, the office will move into a new primary role and report directly to SBA Administrator Isabella Casillas Guzman, bringing it on par with other larger SBA offices, including its Office of Veterans Business Development Office, and giving it more power to elevate the needs of women business owners. The change is expected to be finalized by the end of 2022.
“What it does is say, ‘As women entrepreneurs, we see you, we see your rapid growth, we see your concerns, we see your needs and we’re elevating that to the immediacy of the administrator’s attention. … Here is a proper seat at the table for the agenda of women,’” Natalie Madeira Cofield, the current assistant administrator for the Office of Women’s Business Ownership, told The 19th. Madeira Cofield is also the first Black woman to lead the office.
In the past two years, more women left the workforce than any time in history. It has happened in conjunction with a work movement that has seen more people leave their jobs and, in some cases, opt to start their own businesses instead. Last year, there was a 24 percent year-over-year increase in the number of people filing to start a business — 4.3 million in 2020. A study by LinkedIn found that the number of women-owned businesses on its platform had grown by 27 percent during the pandemic, compared with 17 percent for men and 17 percent for nonbinary business owners.
In some cities and states, regulations around at-home business have eased during the pandemic to give more people an avenue to start a business, which has led women and people of color to seek out that option because of lower costs to entry.
Still, among the 12 million women-owned businesses in the United States, nearly all of them are very small — 90 percent have no employees, according to data from the SBA. Accessing bank loans and capital remains the top concern for women-owned start-ups, which get between just 2 and 3 percent of all venture capital funds. Even new programs like the Paycheck Protection Program, established during the pandemic to reach smaller businesses, have failed to reach women business as a result of long-standing challenges such as having established banking relationships.
Improving access to capital, counseling, training and federal contracts are priorities for Guzman, and the office’s new role will also come with additional flexibility to try to find creative ways to support business owners.
“We are looking internally at the SBA to see how we can better support women to have stronger outcomes in their entrepreneurial pursuits,” Guzman told The 19th. “We want to be strategic about making sure that we meet those women business owners where they are, and oftentimes there’s a different approach that needs to be taken to make sure that they’re getting the capital that they need.”
Recent legislation is designed to broaden those opportunities. The $1 trillion infrastructure bill passed this fall includes $37 billion in federal contracts through the Department of Transportation that are specifically designed to be for small disadvantaged businesses. That’s an area that SBA has struggled with for years. Nearly three decades ago, it set a goal to grant 5 percent of federal contracts to women-owned small businesses, but it has met that goal only twice.
“We look at the infrastructure bill and ways that we can continue to keep supporting and collaborating internally at SBA with our other offices to ensure that women have an equitable seat at the contracting table for all the contracting opportunities that are going to be presented,” Madeira Cofield said.
At the same time, the SBA will continue what has been the largest expansion in its history this year, opening new Women’s Business Centers in underserved communities to provide on-the-ground, personalized support for women business owners. The SBA is now operating 140 centers, including two new ones that recently opened in Puerto Rico serving San Juan, Bayamon and the central eastern region near Gurabo, as well as new centers in Tulsa and Rochester, New York.
The work at the centers helps inform the priorities for the office, Guzman said.
“We’re trying to identify places that can expand our reach geographically, as well as provide insights into specific populations, whether it be more rural or you’re located at an [historically Black college or university], for example, to focus on African American female entrepreneurship,” she said.
That focus, and the elevation of the women’s business office was an independent choice made by the SBA, Guzman said, but it is also part of President Joe Biden’s equity directive and will work in tandem with the White House Gender Policy Council’s equity strategy, which directs government agencies to center policies that advance equity for women, girls and LGBTQ+ people.
One of the tenets of that strategy is to promote entrepreneurship and innovation that will reduce gender discrimination in business and open more avenues for capital for women-owned businesses.
Madeira Cofield sees that work as more imperative now, when the dynamics of the U.S. labor force may be changing.
“If [women] are choosing to walk out of the labor force or if they are forced out of the labor force or downsizing, [we at SBA want them] to be able to walk into the doors of entrepreneurship by making entrepreneurship centers and resources and and capital more accessible and available to them, whether that be at their kitchen table in their homes, or whether that be in their own office space,” she said.
Originally published by The 19th