Why Women Entrepreneurs Don’t Have Enough Capital?

Here are four stories in the financial world that happened in the past month and how they affected you. Can you catch them?

1. Women entrepreneurs still do not have access to enough capital.

While the National Association of Women Business Owners organizes National Women Entrepreneurs Conference 2018 This week, a recent piece on The Hill by Bonnie Nawara (who is the board chairperson and interim president/CEO of the Association of Women’s Business Centers and runs the Center for Women). business for women in Grand Rapids, Michigan) lament the lack of capital for women. business.

“While today’s landscape is increasingly more welcoming to women, gender discrimination and prejudice persists, which makes starting and growing a business difficult,” she writes. difficult,” she wrote. “Research shows that women start businesses with half as much capital as men; they get just 2 percent from the venture capital fund and less than 5 percent of the typical business loan. ” (The source: Hill)

Carried away:

Nawara suggested that Congress should continue to provide funding to organizations that support women entrepreneurs and consider providing additional tax breaks and other incentives to venture capital firms that “reach the equal funding for projects led by men and women”.

Her proposals are sound and while we are working on it, Congress should also consider similar solutions for other minority entrepreneurs who are also lagging far behind in accessing resources. capital. The playing field is not equal and the opportunity to create jobs, expand economies and provide livelihoods to struggling communities could be huge if women and minority business owners could participate more capital .

2. Small business borrowers are on the verge of consumer-style protections in CA

California is about to pass the nation’s first law requiring lenders to disclose interest rates in a way that allows small business borrowers to compare multiple offers. This is in response to the constant complaints from these business owners that many high-cost loans from online lenders have misleading terms and put an unsustainable strain on their finances. . The act, which would expand borrower-like consumer protections to small businesses, is designed to increase the transparency of financial products marketed to small businesses. (The source: Bank of America)

Carried away:

Don’t fool yourself, small business owners: many of our businesses are… well… small. In fact, the vast majority of the 30 million small business owners in this country hire only one person: themselves. So, in effect, we’re like a consumer and we can’t take advantage of some of the more important consumer credit protections? We’re not big enough to hire CFOs, in-house attorneys or financial experts, so the more help we have to protect ourselves, the better. Hopefully this move in California will be emulated nationally.

3. SShopping mall business index shows very strong access to capital amid record high optimism

MetLife & the American Chamber of Commerce’s Q3 Small Business Index at the end of August found that nearly 70% of small business owners felt positive about their companies and the US small business environment. Against this backdrop of general optimism, access to capital is very strong. However, it differs across all small businesses, with 23% of small businesses reporting difficulty getting financing. (The source: Business Insider)

Carried away:

“After the 2008 financial crisis, small businesses’ access to capital declined. Recently, Congress has taken steps to make it easier for small businesses to get capital,” said Tom Sullivan, Vice President of the U.S. Department of Small Business Policy. “We are on the right track, but more policies are needed to make financing easier for small businesses to ensure this important sector of our economy continues to grow, create jobs do and positively impact communities across the country.”

Accessing capital is certainly a lot easier than it was ten years ago (although not so easy for women and minorities as I write above) and even very small businesses with little financial history can also get funding from online providers and other sources… as long as they are willing to pay a much higher interest rate.

4. IRS Targets Potential Tax Rebate Vulnerabilities

The IRS has proposed regulations that say it is abusive for professional service providers like law firms and accountants to use a loophole to take advantage of the 20% deduction in the new tax law. These companies have been using strategies such as separating their businesses into different units or combining multiple businesses into one to achieve the income limits set for transitional businesses by law. new tax. (The source: Accounting Today)

Carried away:

People call it “crack and pack” (no kidding), but don’t fall for that plan. If you are a service business, that is, “trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investment and investment management, trading, trading in certain assets or any transaction or business where the principal asset is the reputation or skill of one or many of its employees” (as recently defined by the IRS), you should be careful about separating your business to avoid restrictions on pass-through deductions. Any company with a “general relationship” will be treated as an entity for the purposes of this deduction.