What is H.R. 5050?

Definition & Examples of H.R. 5050

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H.R. 5050 is the Women's Business Ownership Act. It created opportunities for women business owners, including ending the discriminatory practice of not allowing women to obtain business loans without a male relative as a co-signer.

Learn more about the impact of H.R. 5050.

What Is H.R. 5050?

The Women's Business Ownership Act was passed in 1988 with the help of the National Association of Women Business Owners (NAWBO). The Act was created to address the needs of women in business by giving women entrepreneurs better recognition, additional resources, and by eliminating discriminatory lending practices by banks that favored male business owners over female. The bill was signed into law by President Ronald Reagan.

The National Association of Women Business Owners relates a member story in a report. This member didn't have a husband, brother, or father available to co-sign a business loan, so her 17-year-old son had to co-sign so she could receive funding.

How H.R. 5050 Worked

Many significant and positive changes were brought about in the enactment of H.R. 5050. Here are highlights of the major changes enacted by the law that had a measurable impact on the success of women business owners:

  • Established the Women's Business Center program: Women's Business Centers provide training, mentoring, and financing to women-owned businesses.
  • Required that the U.S. Census Bureau include C-corporations when presenting data on women-owned firms: Prior to the inclusion of this data, statistics for women business owners weren't accurate and diminished the vital contribution women were making in the business world. Many assumed (inaccurately) that women were running home-based businesses that made very little in profits, so the data typically only included women who were self-employed while overlooking women who owned larger, incorporated businesses.
  • Eliminated state laws that required women to have a male relative sign a business loan: Even into the 1980s, some states had laws on the books that required a male relative to co-sign a business loan, even if no male relatives were involved in the business.
  • Created the National Women’s Business Council (NWBC): This bi-partisan council consists of women entrepreneurs and women's organizations that advise the president, Congress, and the Small Business Association (SBA) on policy and program recommendations. 

Benefits of H.R. 5050

By eliminating barriers to funding, many women have been able to open their own businesses. As of 2018, more than 12.3 million firms were owned by women, making up roughly 40% of all businesses. In 1972, there were only 402,000 women-owned businesses, representing 4.6% of all businesses. Although many women choose to start their businesses with their own private finances, having equal access to business loans has enabled scores of women to start and grow their businesses without having a male co-signer.

Although some of these legislative changes may seem small, they have had a huge and dramatic impact on the number of women starting—and successfully maintaining—their own businesses. Women are now slightly more likely to start a business than men, and women of color are founding 64% of new businesses.

Building on H.R. 5050

While H.R. 5050 made significant strides for women, there's still a lack of access to funds. According to a 2018 report by the National Association of Women Business Owners, women start out with half the capital of men, and only 4% of commercial loan dollars go to women-owned businesses. Women are also under-represented on corporate boards, with women holding 20% of Fortune 500 board seats as of 2016.

The Association also recommends more economic-impact data and research on issues like child care and how to better assist female entrepreneurs. Women of color also need support, and they're starting businesses at 4.5 times the rate of all businesses. Women also need more support in securing federal contracts. The federal government has a goal of having 5% of contracts go to women-owned businesses, but that goal has only been met once.

Key Takeaways

  • H.R. 5050 is the Women's Business Ownership Act. 
  • It was passed in 1988 to address the needs of women business owners, who faced hurdles to securing financing. 
  • It established Women's Business centers, required the census to include C-corporations owned by women, created the National Women's Business Council, and stopped states from requiring that business loans be co-signed by a male. 
  • Women now own 40% of businesses, but there's more work to do in making business funding readily available to women.
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Article Sources

  1. National Association of Women Business Owners. "Spotlight on H.R. 5050." Accessed Sept. 6, 2020.

  2. WBENC. "Behind the Numbers: The State of Women-Owned Businesses in 2018." Accessed Sept. 6, 2020.

  3. Businesswire. "Woman-Owned Businesses Are Growing 2X Faster On Average Than All Businesses Nationwide." Accessed Sept. 6, 2020.