Small Business

Executive Summary of Research Report

This report advances new insights about gender differences in finance knowledge and confidence among owners of small businesses in Canada. These insights are important as financial knowledge and confidence are key components of financial decision-making.1 Financial decisions underlie both the success and failure of Canadian small and medium- sized enterprises (SMEs).2,3 Financial knowledge is also associated with small business owners’ growth intentions,4 their ability to acquire and deploy capital,5 and their ability to manage the finances of their enterprises.6

The Organization for Economic Co-operation and Development,7 The World Bank8 and other international agencies report that, on average, women do not perform as well as men on tests of financial knowledge. Canada is no exception: on average, men achieve higher scores on tests of financial knowledge than women do.9 Women business owners also bring less commercial and financial experience to start-up, compared to men.10Financial knowledge, especially when combined with confidence, may impact access issues, including access to financial capital, which act as constraints on business growth.

An understanding about financial knowledge needs relevant to the management of small businesses will enhance the readiness of all small business owners to make well- informed financial decisions. It may also help to explain gender gaps in small business financing in Canada.

To examine associations among gender of business ownership, financial knowledge, financial confidence and financial capital, The Scotiabank Women InitiativeTM consulted  with two global thought leaders about women’s entrepreneurship and small business finance: Dr. Barbara Orser, Deloitte Professor in the Management of Growth Enterprises, and Dr. Allan Riding, Professor Emeritus of Finance, both of the Telfer School of Management, University of Ottawa. Collectively, the team designed a series of innovative metrics and a purpose-built diagnostic to measure objectively small business-related financial knowledge. Research Strategy Group Inc., working in conjunction with Scotiabank®, conducted a survey of 1,000 small to medium-sized businesses or enterprises from across Canada, the analysis of which serve to help inform this report. Educational and financial institutions can use these insights and diagnostics to access and better assist small business clients. This report also informs the commitment of The Scotiabank Women Initiative to support women-owned businesses through education, access to capital and mentorship.

Key Findings

Women business owners’ loan applications are more likely to be approved, but women business owners are less likely to apply for business loans: Among all study participants, 7% of women and 11% of men had applied for a business loan in the 12 months leading up to the survey. Among the subset of participants who needed financing for their firms, 34% of women compared to 47% of men had applied for a loan.

Among loan applicants, 88% of women and 77% of men had their loan applications approved. The finding suggests that, in addition to gender differences in financial knowledge and confidence, women small business owners are less likely to assume the risks associated with debt financing compared to men counterparts. One implication is the need for education programs to alert clients about the importance of financial knowledge to firm survival and growth, and to understand the potential consequences of financial acumen and finance to firm survival and growth.

Financial knowledge powers business growth, yet gender differences remain: The financial knowledge of women business owners is lower, on average, than that of counterpart men business owners. Even after controlling for systemic differences in age, education, experience and language, women business owners are 56% more likely to be ranked as ‘below average’ in financial knowledge than counterpart men business owners. Gender differences persist across years of management experience. Women business owners are also relatively less confident about their knowledge of small business finance: whereas 58% of men business owners self-assessed their level of business-related financial knowledge as ‘knowledgeable’ or ‘very knowledgeable,’ only 45% of women business owners did so. Women also perceive financial knowledge to be less important for business growth, compared to men.

Financing preferences: The majority of survey participants, regardless of firm size or gender, expect to re-invest the firm’s cash flows and to use personal savings to finance business growth. Owners of larger firms, compared to owners of smaller firms, are relatively more likely to anticipate using formal sources of financing (for example, personal and business bank loans) and trade credit. Women business owners, in comparison to men counterparts, are considerably less likely to anticipate using trade credit or bank loans—either personal or business—as sources of financing. Regardless of firm size, the likelihood of using almost all of the listed sources of financing is lower among women business owners than among men
business owners.

There is value in strengthening financial confidence and knowledge: If women business owners in Canada are to achieve their growth expectations, education and other interventions must focus on both financial knowledge and confidence. It is not sufficient to focus solely on financial knowledge. To empower clients, educators, mentors and trainers must be  sensitive and able to respond to the reality of client confidence, experience and learning needs. This infers training materials that alert clients and investors about unconscious biases that may be associated with access to, and use of, finance and small business financial management. It is also crucial to recognize that the ways in which financial knowledge and small business financial management are communicated can enhance, but can also further diminish, confidence.

The report considers the implications of the study findings on small business practice, education and training. The findings indicate that closing gender gaps in small business financial knowledge, financial confidence and financing will further women’s economic security.

For all the key findings, research and survey details, scroll to the top to download the entire report.



1. Organisation for Economic Cooperation and Development (OECD, 2016).
2. Thornhill, S., & Amit, R. (2003).
3. Baldwin, J., Gray T., Johnson J., Proctor J., Rafiquzzman, M., & Sabourin, D. (1997).
4. Constantinidis, C., Cornet, A., & Asandei, S. (2006).
5. Orser, B., & Hogarth-Scott, S. (2002).
6. Orser, B., Cedzynski, M., & Thomas, R. (2007).
7. OECD (2016).
8. Xu & Bilal (2012).
9. Drolet M. (2016)
10. Orser, B., Cedzynski, M., & Thomas, R. (2007).