Small Business Administration Fails in Commitment to Women-Owned Firms

from the US Women's Chamber of Commerce

In a recent press release distributed by the U.S. Small Business Administration (SBA) several claims are made regarding the commitment of the SBA to the growth and prosperity of women-owned firms. The U.S. Women's Chamber of Commerce (USWCC) believes many of these claims to be misleading, painting a far rosier picture of funding and business growth assistance to women-owned firms than actually exists across America.

Support for women businesses in federal contracting falls short

The SBA reports strong growth and support for women-owned firms in federal contracting. The details tell a very different story. Even though privately-held women-owned businesses represent 30 percent of the businesses in the U.S., they still receive just 2.98 percent of federal contracts. The federal government has never achieved its extraordinarily low goal of 5 percent contracting with women-owned businesses. In FY 2003 alone, this failure represented a loss of $5.6 billion for women-owned businesses.

Between FY 2002 and FY 2003, total federal procurement dollars grew by nearly $50 billion (30 percent) while spending with women-owned firms grew only $1.5 billion. If the government's five percent goal for spending with women-owned firms had been reached, spending growth with women should have reached $2.5 billion; there's a shortfall of $1 billion for women-owned firms. And, because women-owned firms received only 2.98 percent of all federal procurement dollars in FY 2003, the total shortfall reached nearly $6 billion in just one year.

"While the SBA and other government groups believe they have something to cheer about, our members-more than 150,000 women business owners and economic development leaders across the country-say, 'Hold on'," says Margot Dorfman, USWCC CEO. "We are too far away from achieving an equitable share of federal contract dollars to be doing any kind of celebrating."

SBA refuses to implement the Women's Procurement Program

Public Law 106-554 (the Women's Procurement Program) was signed into law nearly four years ago providing a targeted set-aside program for women-owned firms in industries underrepresented in federal contracting to help federal agencies increase their purchasing with women-owned firms. However, the SBA has done everything possible to stop the implementation of this important program to assist women business owners.

At a recent meeting, SBA Administrator Hector Barreto told leaders of the USWCC the current administration has no intention of implementing P.L.106-554 even though it is law. Barreto has not budgeted or requested the necessary funds, nor has he included the establishment of regulations for this program in his biannual listing of proposed regulatory actions.

Lending to women-owned firms doesn't keep up with growth of the market

The SBA claims record-breaking performance for lending to women. The reality is that women receive fewer loans and loans of smaller size than their male counterparts. The disparity between the number of women-owned firms and their access to capital through the SBA is alarming.

According to Terry Williams, president of the National Procurement Council, the USWCC's affiliate procurement trade association, between FY 1998 and FY 2003 women-owned firms experienced the most dramatic increase ever in the number and financial growth of their firms. The number of women-owned firms grew 23 percent and their revenues grew 46 percent. During this same time, however, there was actually a 7.5 percent decrease in the average value of loans made to women-owned businesses utilizing U.S. Small Business Administration programs.

Also, during this dramatic growth period, the percentage share of SBA-backed loans provided to women-owned firms grew only 1.1 percent. So, the "record breaking" performance was actually a miniscule increase over five years even though the number of women-owned firms grew by more than 20 percent and their revenues increased nearly 50 percent.

"Clearly, SBA-backed lending to women is not keeping up with the increased number of women-owned firms," Williams notes. "This lack of equal access to capital leaves women-owned firms at a significant competitive disadvantage and hinders their ability to be successful in federal contracting.

"In a clear expression of the SBA support of access to capital for women, Melanie Sablehaus, deputy SBA administrator, testified before the House of Representatives Committee on Small Business on May 12, 2004: 'Women-owned businesses require less as far as loan size.'," Williams adds. "It's been our experience that a plant expansion, R&D bills, technology upgrades, and even office chairs cost about the same when either women or men are writing the check. We're dumbfounded by the SBA's statement and reluctance to administer equitable funding practices."

SBA commitment lacking

"The U.S. Women's Chamber of Commerce believes the SBA should be a strong champion of women-owned firms," Dorfman reiterates. "Our members do receive valuable support from many regional SBA representatives...but to really move the needle, we need leadership and commitment from Washington.

"It's clear women-owned firms are acquiring less capital and less federal procurement dollars than their male counterparts. We simply ask the SBA to tell the real story regarding their performance for women-owned firms; implement Public Law 106-554, the Women's Procurement Program; seek adequate funding for their agency; and work harder to bring equal access to capital for women-owned firms," Dorfman says.

For more information, please see the USWCC full-feature Web site: www.uswomenschamber.com or contact Jill Van Dierendonck at (800) 738-0653 or (888) 418-7922. The U.S. Women's Chamber of Commerce(TM) is the pre-eminent national women's chamber of commerce network whose mission is to develop leaders, accelerate economic growth and provide a community voice for women.