99% of women-owned businesses say the federal government hasn’t done enough to support them, survey finds

Originally posted by The 19

The United States has so failed in its efforts to work with women-owned small businesses that 99% of women entrepreneurs agree: the federal government needs to do better.

This figure, of new investigation by Goldman Sachs’ 10,000 Small Businesses Voices program illustrates a universally shared frustration among women-owned businesses. The results, first shared exclusively with The 19th, represent responses collected over the past week from nearly 900 women small business owners in 47 states and Puerto Rico.

Up to 89% of female small business owners said they were not on equal footing with male business owners, and 72% said that if they were to rate the federal government on the effectiveness of its programs , services and resources, they would give it a “C” or less.

“They feel like they’re not a priority in Washington,” said Janetta King, vice president of Goldman Sachs’ 10,000 Small Business Voices, which helps advocate for small business owners.

At the heart of this sense of neglect are the ongoing difficulties in obtaining certification as a women-owned small business through the Small Business Administration (SBA). The agency promotes certification as a way to compete for more federal contracts, especially in industries where they are underrepresented.

But the process of getting certified is cumbersome and time-consuming for companies, and many don’t think it’s worth the effort. Only 36% of companies surveyed by Goldman Sachs were certified, and of those, 58% said the process was difficult and 42% said they didn’t think it was worth the effort.

These statistics highlight the long-standing challenges the SBA faces in meeting its own program goals.

In three decades, the agency has consistently met its goal of awarding 5% of federal contracts to certified women-only small businesses twice — in 2015 and 2019. In 2021, the last year for which data are available, 4.63 percent contract dollars went to women-owned small businesses, according to a Congressional Research Survey study prepared for members of Congress.

And the problem does not improve. From fiscal year 2020 to 2021, the total number of small businesses that were federal government prime contractors decreased by 6%, and women-owned small businesses accounted for a quarter of that decline, said Dane Stangler, director policy initiatives at the Bipartisan Policy Center, a nonpartisan think tank.

“They represent a small minority of the total number, but we know for sure that they are being impacted out of proportion by this continuing trend,” Stanler said.

The system has been plagued with challenges since its inception. It took the SBA a decade to implement the Women-Owned Small Business Certification Program, citing challenges in determining the industries in which these businesses were underrepresented in federal contracts. Many federal agencies have little experience with this, federal procurement officers do not consistently comply with program regulations, and the SBA struggles to control fraud in the program. An audit of the program found that approximately 3.5% of women-owned small business contracts between April 2011 and June 2018 were awarded to ineligible businesses.

Beyond the fundamental challenges of the program, women business owners report that the process is simply not working for them.

Shaniece Bennett, the founder of Accutrak Consulting and Accounting Services, works with small women-owned businesses to help prepare documentation for the certification process. Gathering all the necessary paperwork to even apply could take hours and days, she said, especially if companies don’t pay a third party to help or have someone in-house dedicated to the job.

“It’s not something that’s part of the business, [but] it’s a necessary evil [for certification] and sometimes you might not get a return on your investment,” Bennett said.

Additionally, small businesses must recertify every three years to remain eligible for federal funds.

Owner Lynn Gooden assists customers at Mothers Hair Beauty Supply in Houston, Texas. (Brandon Bell/Getty Images)

Of all the companies Bennett has worked with for more than a decade, less than 1% have won federal contracts. Her own company has only once won a government contract under the Women-Owned Small Business Program. A second contract was cancelled.

Kate Isler, CEO of a women’s e-commerce marketplace called WMarketplace Inc., said she has yet to be successful in securing a federal contract. E-commerce is one of the industries excluded from competing for set-asides or contracts that only certain small businesses can compete for in the federal government, she said. Isler achieved certification, but the process for his five-person company was a significant burden.

“If you’re a small business with two or three people, you can’t take the time to put all the paperwork together and work with this system,” Isler said. “The system is antiquated, and without the benefit, you’re like, ‘What am I doing? Am I making revenue from sales today or am I spending time do this where it could pay off in 18 months?”

There’s always a benefit to certification — Isler said it’s helped her network and work with other women-owned small businesses who are also certified. But for many, the benefits don’t outweigh the cost.

The agency said in a statement that SBA Administrator Isabella Guzman is committed to making the SBA a more customer-centric organization.

“Part of this effort is ongoing technology enhancements to support a more positive customer experience for all SBA programs,” the statement said.

The number of certified women-owned businesses has grown from 1,000 to more than 8,000 since 2021, the agency said, and the SBA has expanded the industries eligible for reserved awards from 444 to more than 700. But despite these increases, the agency has limited execution capacity. The SBA has set the 5% target, but the money to award contracts lives within individual federal agencies — the Department of Defense (DOD) will ultimately award contracts as it sees fit, for example, said Stangler. And while many of these agencies are meeting the 5% target, some, including the largest as DODare not

“As well-meaning as SBA wants to be, the scope of their impact is necessarily limited,” Stangler said.

A central solution could be to reauthorize SBA. Congress has the power to make changes to government programs or agencies through a process called reauthorization, and most agencies go through this modernization process every two years.

The SBA is an outlier. The agency as a whole has not been reauthorized since 2000, which would allow it to update its programs, goals and technology to better serve business owners.

Bennett wants to see the “unbundling” of contractual requirements, which could particularly help black women business owners like her. For example, a construction contract may require having someone on staff who performs the audit. While that makes sense for the federal government — why contract with five companies when you can get all the services from one — it excludes companies that aren’t as diverse due to limited access to capital.

Black women-owned small businesses “tend to specialize and not be a complete supplier,” Bennett said. “If the goal is really to promote equity and diversity, then that’s the way to go. Something has to change.

The SBA said in a statement that contract bundling had a disproportionate impact on women-owned businesses and contributed to the shortfall in meeting the 5% target. The consolidation costs women-owned small businesses about $1 billion a year in contracting opportunities, the agency estimated.

Advocates believe the pandemic has provided an opportunity to better structure the agency to reach out to women-owned businesses and address pressure points, particularly since it became clear that longstanding issues with access to opportunities and capital were hinder the economic recovery of these business owners.

In April 2020 alone, the number of working women business owners dropped an unprecedented 25%, according to a report by the National Bureau of Economic Research. A small group of women-owned small businesses have accessed loans from the Paycheck Protection Program, the repayable business loan program created to offset coronavirus-related losses.

The reauthorization process would be the mechanism to have conversations about how the SBA should be restructured to better serve small business owners.

Stangler said there might be an appetite for re-clearance. The issue enjoys bipartisan support, and several lawmakers from both houses of Congress have expressed interest. But there’s still an “uphill battle to make this point,” King said, among other priorities Congress is addressing this session.

“I think the SBA does a lot with what it has,” King said, “but that’s why we’re calling on Congress to go through the reauthorization process because that’s the process where you pull the curtain and you dig a little deeper and ask these questions, “Why aren’t we meeting these goals?” And why do 99% of women small business owners say the federal government could do more to support small business owners? to women?”

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