How Surety Bond Companies Can Support Women-owned Businesses
A recent article in CFO magazine titled ‘Women-Owned Businesses Are Greater Credit Risk‘ spurred discussions by publicizing data from a small-business analysis performed by Experian.
According to Experian’s data analysis, “women are more likely to put their personal credit at risk and they have less access to trade credit than male business owners.”
Now, while the data may well be factually correct, what does that mean? And what about surety bonds then, where premiums are based on personal credit?
What it Means to Be a Woman Business Owner
To sum up the data from Experian’s study, based on a sample from their consumer and commercial credit database:
- Women have slightly lower commercial and personal credit scores
- More women have between 10-19 tradelines open than men
- More women have their credit accounts become 90-plus days past due
- More small business women owners pay their bills later than men
- Women business owners have less access to capitals than their male counterparts
- Fewer women-owned businesses exceed $500,000 in sales
- Women business owners have lower personal incomes than their male counterparts
What can we conclude from these findings? Women are and continue to be largely misrepresented in all avenues of business – big or small. Only 26 Fortune 500 companies have female CEOs. For women in the construction industry or the automotive industry things aren’t too bright either. Unfortunately, women often have a hard time getting hired or, alternatively, drop out mid-career because of the mountain of challenges they are often faced with.
Why this is so is continuously being debated. Consider, for example, this recent podcast on women in construction that explores the reasons why there are so few women in construction, despite there actually being quite a few who display an interest.
Slow as it may be, change is happening and there are many initiatives that seek to address these problems. They include NAWIC‘s Women in Construction Week, the Women in Construction Conference coming up in October, or even GM’s initiative to form groups of female auto dealers.
Yet what about surety bonds for women-owned businesses? Do Experian’s findings justify a higher surety bond premium policy?
A Gendered Surety Bond Policy? Don’t Be Absurd!
Experian’s findings are not problematic in themselves. The question, rather, is what we make of them. Using findings like these to influence surety bond premiums policy would be a mistake.
Furthermore, doing so would reinforce the status quo of what the study found. It would make obtaining surety bonds harder and more costly for women. Add other similar policies that women or minority-owned businesses are facing on a daily basis and what you’re left with is a vicious circle. It’s no wonder there aren’t more women out there doing business.
One could, of course, argue that it’s all strictly business and that surety bond cost is determined on the basis of very concrete and tangible criteria, such as credit score or strong personal and business financials. In itself that is true – what matters is the health of a business and not its owner’s gender.
But that, too, when taken to an extreme reinforces a black and white worldview that feeds into the same type of problem. Even if surety bond premiums are calculated on such a basis, that is not the only criterion.
As the saying goes – where there’s a will, there’s a way. While assessing a business and what premium it should pay on its bond, surety bond companies can and often do take into account other factors than just the numbers.
And, especially if a business is woman or minority-owned and is striving to get more federal contracting opportunities, or can clearly demonstrate a good record, then there is no reason for surety bond companies not to support it, in order to balance out the social imbalances that exist.
In fact, surety bond companies could even consider creating special programs for women-owned small businesses, in order to open up industries further and create more possibilities. And let we not forget, there are many qualities which women, as leaders, bring into business, which deserve to be valued and supported.
In other words, what Experian’s data analysis finds may be correct but what should be done in response to it is exactly the contrary to what dry business logic may suggest.
What do you think? How can surety bond companies help women-owned business develop and succeed?