It is hard to believe that women were not able to obtain business loans without a male co-signer just 30 years ago. Up until 1988, an independent woman who wanted to start a business was denied a loan even when her finances indicated that she was qualified.
Therefore, the 30-year anniversary of the H.R. 5050: Women’s Business Ownership Act (WBOA) of 1988 is a historic and significant date. Introduced by John LaFalce, a former New York congressman, the act aimed to bolster female business owners by guarding against discriminatory lending practices. The purpose of this act was to recognize the enormous future potential of female business owners and entrepreneurs as well as women’s existing contributions to the economy.
The four tenets of H.R. 5050 included provisions that extended women rights that should have been established from the beginning: 1) Extending the Equal Credit Opportunity Act to include business credit, 2) Launching a “demonstration project” that resulted in the establishment of women’s business centers across the country, 3) Establishing the National Women’s Business Council 4) Directing the Census Bureau to include all women-owned firms in its quinquennial business census.
In 2018, it is sometimes hard to imagine that the principles of H.R. 5050 were needed at all. “Women business owners today are often shocked to hear about the challenges that their predecessors faced only 25 years ago,” says Virginia Littlejohn, a member of the National Association of Women Business Owners (NAWBO). It was the NAWBO leadership team that helped the House Small Business Committee organize hearings on H.R. 5050.
Littlejohn refers to a female witness at the time, who didn’t have a husband or father to co-sign her business loan, communicating, “[She] had to ask her 17-year-old son to co-sign for her—when he couldn’t even vote,” she said.
During the hearings, many stories came to light of open discrimination by which women were asked to put significantly more money down, and required to have guarantees and co-signers that men were not required to have. But with H.R. 5050 things started to change.
“This landmark piece of legislation ushered in a transformation in women’s enterprise development by addressing key barriers that had been impeding entrepreneurism and business growth by women,” said Billie Dragoo, former Chair of NAWBO. “As a result of this legislation, women entrepreneurs were provided with long overdue access to capital, education and technical assistance offered in a woman’s voice, access to federal policy making circles, and the undercounting of the number and economic contributions of women-owned businesses were finally addressed.”
Before 1988, women’s contributions to the economy were downplayed, and unaccounted for. A big part of this invisibility had to do with inaccurate census-taking regarding women-owned business. The concluding report of the H.R. 5050 hearings, which were the most extensive ever held by Congress on women-owned businesses, was called the “New Economic Realities: The Rise of Women Entrepreneurs”.
Fast forward 30 years and the following statistics, though not as strong as we’d like, are still rosy. As of January 2017, there were an estimated 11.6 million women-owned businesses in the United States that employ nearly 9 million people and generate more than $1.7 trillion in revenue. During the 20 years from 1997–2017, the number of women-owned businesses has grown 114 percent compared to the overall national growth rate of 44 percent for all businesses.
The future is indeed female.
While Wright’s 1988 predictions have not yet come true, things are definitely looking up for female entrepreneurs. It is important for younger generations of women in business to be aware that prohibitive lending discrimination is not ancient history. Women must not forget that 30 years ago, they would probably not have had access to the capital and support necessary to start a business. Women must continue to fight for equality, but H.R. 5050–and the activists who spearheaded it–certainly helped and continue to help tip the scales.