On why women-owned businesses take more time to secure microloans

Examining gender differences in business financing reveals important dimensions on which women- and men-owned businesses differ. Although considerable progress has been made in understanding gender differences in mobilizing resources, the role of time in business financing remains an underexplored topic, particularly among marginalized entrepreneurs, where decisions about and outcomes related to time play an important role in business success. Leveraging the literature on gender role congruity and risk preferences along with a sample of nearly 300,000 microloans funded on the kiva.org platform, we explore whether the timespan for women to reach their microloan funding goal differs from that of men and how borrowers’ strategies regarding the size and repayment duration of these microloans influence this gender difference. It takes women longer than it takes men to get the same business loan on kiva.org because (1) women choose bigger loans, (2) women ask for more time to pay back their loans, and (3) because lenders prefer lending to men-owned businesses. Thus, our data suggests that lenders prefer men-owned businesses partially because men make choices about loans that lenders prefer—men choose smaller loans and ask for less time to pay back the same loan.