The funding report
Why IFundWomen Members Are More Successful in Securing PPP Loans
By: Karen Cahn, founder & CEO of ifundwomen
January 20, 2021
Not-so-humble-brag: As of August of 2020, 10% of IFundWomen Members surveyed specifically about PPP, received Paycheck Protection Program loans. Compare this with 5%, which is the total proportion of female-owned companies that reported getting PPP loans during the same time period.
Here’s what we know:
- From the publicly available data from the SBA: roughly 5% of the loans went to women-owned firms
- From IFundWomen’s proprietary research, through a survey set of 20K women-owned businesses specifically asked about PPP, 10% of our members got their PPP loans
Here's what we don’t know:
How many women applied to PPP nationally but elected to not specify their gender for fear of getting rejected.
In fact, I did not specify my gender when I applied for IFundWomen’s PPP (which we were approved for), so IFundWomen itself is not represented in the 5%. Another nuance: IFundWomen was listed on the SBA website in the over $150K loan category, where there could be more savvy WOBs who didn't specify their gender, so theoretically, the SBA number could be higher than 5% but I doubt it's much higher.
It's my opinion that most women don't realize that the banks and financial institutions actually ding women borrowers because of a whole host of factors like credit scores, assets in the bank, lack of high-level relationships with the banks, and that the cards are literally stacked against them. So, these deserving women-owned businesses who dutifully specified their gender on their PPP application, thinking that it would be helpful, got dinged again. Reminder, this is my educated opinion on this subject on which I'm an expert. There is no way to get this data set.
Ok, so why are IFundWomen founders so successful? I’ll tell you.
At IFundWomen, our #1 core KPI is increasing funding for women entrepreneurs. When the PPP launched in March of 2020, we literally walked in the shoes of our customers in real-time. We were applying for our own PPP loan while simultaneously reporting on our daily experiences with our members. We coached hundreds of members through the arduous process that was PPP1, and then shared our experience on Reid Hoffman's Masters of Scale Podcast.
The magical combination of IFundWomen’s award-winning coaching program, which we made free to all during the pandemic and my personal ranty vlogs on the PPP process that I was going through on behalf of IFundWomen both inspired and taught our members to push through and get those PPPs through any means necessary. We encouraged them to keep applying even through tranche 2, and our results were outstanding.
Heck, we’ve even won awards for our work: we were recognized by City & State Magazine on their 2020 Responsible 100 New Yorkers list and by FLIK on their list of 21 Womxn Entrepreneurs to Watch in 2021.
Even when our legislators seemed 100% focused on getting economic stimulus into the hands of Main Street business owners this past spring, the sad fact is that Main Street businesses, especially those owned by women, fared very poorly in terms of receiving federal aid. Helloooo, Shake Shack.
Female-founded companies—a group that already struggled to access capital before the pandemic—only got roughly 5% of the $5.2M total Paycheck Protection Program loans that were doled out. This is despite the fact that women own 40% of the businesses in the United States.
Businesses owned by people of color, especially Black people, were more likely to either temporarily or permanently close their doors than their white counterparts. As a result of being in industries that are most impacted by the pandemic—personal care, retail, and restaurants, women are more likely to close their doors. Women are also more likely to be impacted by the increased caregiving responsibilities brought about by the pandemic.
Black women entrepreneurs received little federal aid: less than 0.5% of PPP loans went to these businesses, compared to the 70% that went to businesses owned by white men, according to Accountable, a nonpartisan watchdog group.
I was interviewed by a number of mainstream publications about “What I think the Biden administration should do if there is another PPP?” and I was very frank with the reporters and said, “Give it all to women and minority-owned businesses.” Period, the end. Suffice it to say, nobody printed my advice.
We are now at the beginning of taking applications for PPP2 and allegedly veteran, women, and minority-owned businesses will be prioritized. Although fool me once, ya know what I mean?
Check out the statement below from the SBA. Notice the complete lack of gender and ethnicity metrics they cite in the “successful PPP1” program:
“The first round of the PPP supported the employment of 51 million American workers and over 80 percent of small business payroll across all 50 states and territories. More than 87 percent of loans have been for $150,000 or less, with an average loan size of $101,000 – demonstrating the accessibility of the PPP to even the smallest businesses.”
#NotFunFact: According to the 2019 American Express State of Women-Owned Business Report, Black women-owned businesses earned average revenue of $24,000 per firm vs. $142,900 among all women-owned businesses. The gap between Black women-owned businesses’ average revenue and all women-owned businesses is the greatest of any minority.
While PPP loans are not revenue-based, it doesn’t take a rocket scientist to realize if your business is only making $24k/year, you’re probably not paying yourself much of a paycheck. It’s not surprising that only 0.5% of the PPP loans went to Black women entrepreneurs. Do these people think we’re stupid?!
“Building on the success of the first round of PPP, SBA is continuing to address potential barriers to access to capital for minority, underserved, veteran, and women-owned business concerns.”
Building on what success exactly? Feel free to read the rest of the spin here.
Fundamentally, the PPP is a good thing, and, yes, women and minority-owned businesses should get all of it. (We won’t, but we should.)
At IFundWomen, we are dedicating the next 10 weeks (or until the money runs out) to helping ALL women and ALL minority-owned businesses get the PPP funding they need, and frankly, deserve to get their businesses back on track.