How we're helping women-owned start-ups succeed

Women chief executives at Yahoo!, IBM, General Motors and other corporate giants are getting plenty of attention these days. But here's 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 U.S. 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.

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In a Harvard Business School study, potential investors watched two video taped entrepreneurial pitches, one with a voice over 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.

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.

What more young workers are shying away from

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.

Our current 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 21^st century. In October – 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.

This followed other key accomplishments.

In 2014, I joined with Senators Maria Cantwell (D-WA) andKirsten Gillibrand (D-NY) to pass key elements of the Women's Small Business Procurement Parity Act. This new law gives women-owned small businesses more opportunities to compete for federal contracts, on par with other traditionally disadvantaged groups.

Small business gets with the social program

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; women-owned firms receive more than 50 percent of these loans. Two years ago, we persuaded the SBA to waive fees for small businesses that take out 7(a) Express loans of up to $150,000; this led to a sharp increase in these small loans to women-owned businesses.

Help is here for female entrepreneurs

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.

Commentary by Sen. Jeanne Shaheen (D-NH) who is the lead Democrat on the Senate's Committee on Small Business and Entrepreneurship. Follow her on Twitter @SenatorShaheen.