Women-owned businesses present lower risk factor, data shows

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Data indicates that women-owned businesses present a lower statistical risk for business financiers. Photo: Getty Images
Data indicates that women-owned businesses present a lower statistical risk for business financiers. Photo: Getty Images
  • Data indicates that women-owned businesses present a lower statistical risk for business financiers, according to the area manager at an SME finance company.
  • The growth of entrepreneurship among women in the country has been encouraging.
  • Women-owned businesses account for a lower percentage of non-performing loans, according to Business Partners. 

Statistic show that women-owned businesses present a lower risk for business financiers, according to Janeesha Perumal, area manager at SME finance company Business Partners.

While women-owned businesses are still in the minority in South Africa, the growth of entrepreneurship among women in the country has been encouraging. A survey conducted by SME South Africa found that, in the past year, around 47% of South African SMEs are led by women – a 6% increase from the previous year.

"At present, non-performing loans - loans in arrears by 90 days or more - account for 4.5% of our total loan portfolio of around R3.18 billion. If we take a more detailed look at only the loans that have been extended to women-owned businesses, we see that only 3.5% of that total portfolio of around R1.14 billion is non-performing," explains Perumal.

"We have found that women entrepreneurs are consistently very reliable as a group when it comes to maintaining good credit with lenders."

Against the backdrop of the severe economic impact of the Covid-19 lockdown on businesses, groups that provide finance for SMEs are becoming increasingly risk-averse, because many SMEs are already struggling to meet their existing payment obligation. In Perumal's view, it is important to encourage more financiers to fund women-owned businesses.

According to Andiswa Bata, FNB business regional head for Gauteng South West, the case for uplifting female entrepreneurship is clear, and women entrepreneurs can be assisted in a number of ways. These include actively seeking to trade with women-owned or run businesses and, importantly, to pay them on time; to enhance their profile and introduce them to opportunities where possible; and to share knowledge with them, whether about best practice cash flow management strategies or innovative social media marketing ideas.

Global entrepreneur community, Future Females, in partnership with the UK South Africa Tech Hub, has created a white paper report detailing the individual, economical and social benefits of an increase in female-owned businesses, as well as the challenges that women typically face when starting a business.

"Despite the many positives of women-owned businesses, and an increased focus on supporting female entrepreneurs in recent years, women are still starting businesses at a disproportionate rate to men, and there are still a distinct number of challenges that women face when starting their business," the report states.

In a recent survey conducted by Future Females within their community of female founders, they found that the top three things women say are holding them back are a lack of funding, a lack of access to experts or mentors, and a fear of the unknown or instability.

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