Women-owned small- and medium-sized enterprises in Canada continue to make strides, with a growing proportion boasting sales or revenue growth rates of 10% plus.

Yet women-owned SMEs (where women own 51% or more) remain underrepresented, at roughly 15.6% — a proportion that has remained relatively stable over the past decade, according to 2017 data from Statistics Canada.

As part of its efforts to support women-owned small and medium-sized enterprises, The Scotiabank Women Initiative has released a detailed research report outlining how empowering women with access to financial knowledge can help fuel progress.

“Financial knowledge, especially when combined with confidence, may impact access issues, including access to financial capital, which act as constraints on business growth,” the report said. 

The research featured in the report was conducted by Scotiabank in consultation with Dr. Barbara Orser and Dr. Allan Riding of the Telfer School of Management at the University of Ottawa.

The online survey of 1,000 entrepreneurs was conducted between October 18 and 29 last year.

There are a myriad of factors that may contribute to these financial knowledge gaps, including access to opportunities to gain financial acumen through experience, said Orser.

"Women are less likely to have bottom-line responsibility in their careers, and on average, bring less small-business financial experience to start-up," she said. “Knowledge and confidence about small business finance are not issues that we tend to talk about.”

Scotiabank's study found that after controlling for systemic differences in age, education, experience and language, women small business owners are 56% more likely to be ranked as "below average" in financial knowledge than men small business owners, and gender differences persist regardless of the years of management experience.

Women are also relatively less confident about their knowledge of small business finance, the research paper said. While 58% of men described themselves as "knowledgeable" or "very knowledgeable" about small business finance, only 45% of women rated themselves similarly, according to the survey.

Women entrepreneurs’ loan applications more likely to be approved

The perception of financial knowledge can impact confidence, and potentially influence business decisions.

The study found that women business owners are less likely to apply for business loans, but those that do are more likely to be approved.

Among those entrepreneurs surveyed who needed financing for their firms, 34% of women applied compared with 47% of men, while 88% of women and 77% of men applicants received loan approval.

The financial knowledge gap findings are in line with other studies, such as research conducted by Organisation for Economic Co-operation and Development (OECD), said Orser.

"The broader literature says women are less likely to be exposed to this kind of information," she added.

But while most studies have focused on general financial knowledge, this is among the first to focus on women entrepreneurs and small business financial knowledge in Canada, said Gillian Riley, President and CEO, Tangerine Bank, and executive sponsor of The Scotiabank Women Initiative.

In light of International Women's Day, it's important to celebrate the continuously growing number of achievements women have made, but also a reminder that we must all work together to continue closing gender gaps, she added.

"We have a real opportunity to help women who are leading businesses advance to the next level,” Riley says. “Through these unique research insights, we can continue to tailor our program to help women business owners increase their overall level of financial knowledge and we encourage entrepreneurs to use these insights to grow and thrive in their business.”

The Scotiabank Women Initiative — which recently announced a commitment to allocate $3-billion in funding to women-led businesses in Canada over its first three years — is developing and adding new tools to its Knowledge Centre, based on the study.

"These innovative tools are leveraging evidence-based insights to create learning resources that are practical and accessible," she said.

Read the full Scotiabank Women Initiative research report here.