Call for policies to boost female-owned SMEs

Women-led businesses face “structural and cultural barriers to accessing capital” according to an influential group of MPs, who are calling for mandatory gender-segmented investment reporting across banks, venture capital funds and angel investors in order to boost growth opportunities.

A report from the all-party parliamentary group (APPG) on women and work maintains that “gender equity in finance must be treated as an economic imperative, not just a social goal.”

Labour MP Sarah Russell, who is co-chair of the group alongside Baroness Karren Brady, the vice-chair of West Ham football club, said: “If women started and scaled businesses at the same rate as men, the UK economy could see up to £250bn in new value.

The APPG report found just 2% of equity funding went to female entrepreneurs, down from 2.5% the year before, while more than 80% went to all-male teams. It states that mandated gender investment reporting would expose biases in women’s access to capital.

Systemic change

A report from the Women and Equalities Committee’s (WEC) on female entrepreneurship, published at the end of last year, also highlighted the need for measures to improve transparency and increased incentives to change behaviour in order to increase the range of funding available to women with start-up business plans.

It recommended the government develop and publish an ambitious strategy for advancing female entrepreneurship and unlocking untapped economic growth to be published within 12 months, to be overseen by a dedicated Minister and Office within the Department for Business and Trade with an assigned budget and responsibility for driving implementation of the strategy, and a remit to ensure accountability and transparency through data collection. 

“The committee received concerning evidence that female entrepreneurs face significant disadvantages in accessing finance, networks and support due to systemic bias, a lack of diversity among investment decision-makers and entrenched cultural norms.

“Programmes to address these impacts have been insufficient in scale and ambition and despite best efforts have had limited effect, with female entrepreneurs remaining disproportionately underrepresented and underfunded. 

“A national strategy is needed to drive the systemic change that is required. The ambitious programme we are calling for needs to include a mix of incentives, targets and mandatory reporting if it is to be effective.”

Female borrowing “defensive”

There is further evidence of the challenges facing female founders in accessing and managing finance in new data from Purbeck Insurance Services.  This found a 51% rise in borrowing activity among female SME business owners in 2025, but says even so, only 1 in 10 entrepreneurs using external funding and seeking insurance from Purbeck is female.

Overall female founders borrowed £42 million last year through personal guarantee backed loans and took insurance to mitigate the risk. Despite the rise in applications, Purbeck characterised  borrowing among female-led SMEs as “largely defensive”, with 35% of applications in Q4 2025 for working capital. The personal guarantee insurance (PGI) specialist said this reflected the need to manage higher costs and economic uncertainty. Just 17% of applications were linked to investment in growth initiatives.

“With International Women’s Day putting the spotlight on economic equality, our data highlights the need for lenders and policymakers to do more to level the playing field for female-led businesses. The 51% increase in applications for PGI tells us more women are actively engaging with funding, but they still lag way behind men in the total picture of borrowing activity we see amongst SMEs.”

Recent DBT research has also identified women as one of several groups it says are underserved entrepreneurs, saying they face multiple barriers that are “often rooted in structural and cultural factors rather than a lack of ambition”.  

In addition, government schemes such as Help to Grow have been criticised for inadvertently excluding many women-led businesses because of eligibility criteria such as requiring more than five employee  which disproportionately affect smaller enterprises, which are more likely to be run by women. 

The DBT notes that the challenges they experience in raising finance mean some are “turning instead to alternative lenders or short-term credit options like revolving personal or business credit cards, which appear to them less risky despite their limitations and unsustainably high interest rates.”