Bank of Montreal is attempting to position itself as the lender of choice for female entrepreneurs, announcing Wednesday that it would make available $3 billion in capital over three years for Canadian businesses owned by women.
“Part of this is making it very clear that we’re open for business when it comes to female entrepreneurs and we want to do business in this space,” said Dev Srinivasan, head of Canadian business banking at BMO, in an interview.
The bank’s $3-billion announcement on Wednesday follows a commitment made by BMO in 2014 to provide an additional $2 billion in credit over three years for women-owned businesses. That credit was fully tapped, according to Srinivasan.
But the latest announcement also comes after recent research showed that companies owned by women are being held back by a lack of access to funding, in part because of the bias of investors and lenders. A study released in February by BMO, Ottawa’s Carleton University and The Beacon Agency found women were continuing to “struggle to obtain capital for growth and start-up.”
“They are often self-funded, which slows their ability to grow,” the report added. “Unconscious bias impacts women entrepreneurs in obtaining funding from financial institutions and investors and in advancing their business.”
Likewise, the Canada-United States Council for Advancement of Women Entrepreneurs and Business Leaders, which is made up of some of the top female business executives in the two countries, reported in May that “there is a broad recognition that capital providers have not penetrated the female entrepreneurial market as well as they have the male entrepreneurial market.”
“This could suggest that there are weaknesses in capital providers’ ability to find business deal flow, as well as that women owners may not be actively pursuing capital financing at the level they could,” the council’s report said.
The BMO-Carleton-Beacon study made a number of recommendations for financial institutions, including that banks should “examine traditional assumptions in loan approval criteria with a gender lens and address unconscious bias in preparing the assessments.”
Srinivasan said that the bank’s risk appetite would not change with the new funding, and that the money would still travel through the regular credit process, aimed at companies with some assets and revenue.
“But this is very much about making the capital available and most importantly making the female entrepreneurs knowledgeable that this is available,” Srinivasan said, noting that the technology and agriculture sectors were areas of interest for the bank.
Banks have also been making a push to level the playing field on the product side. BMO, Canada’s fourth-largest lender, launched a “Women in Leadership” mutual fund in 2016 that the bank calls “the first impact investing mutual fund offered by a Canadian bank focused on gender diversity.” Similarly, in March, Royal Bank of Canada unveiled an exchange-traded fund aimed at Canadian companies with a “demonstrated commitment to gender diversity.”
But BMO says it has other initiatives in the works as well, including an online resource centre for women business owners.
“We consider ourselves the leaders in this space now,” Srinivasan said. “We want to really solidify that position.”
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