Given that the number of women-owned businesses has grown at nearly four times the rate of men-owned firms over the past 20 years[1] — 28.5% vs. 7.5% — it’s nearly incomprehensible that just 30 years ago a woman needed a male cosigner to obtain a business loan. That all changed in 1988 with the passage of H.R. 5050, the Women’s Business Ownership Act, a piece of landmark legislation that is the bedrock for policies, programs and public/private initiatives that continue to support businesswomen today.

H.R. 5050 set the stage for a whole new era, where women could not only start businesses but grow them into multimillion-dollar enterprises. “We must never forget our history and the courageous pioneers who advocated for change that would lead to opportunities for the generations to come,” says Sharon Hadary, founder of the former Center for Women’s Business Research. “H.R. 5050 gave us a platform to convey the value of women-owned businesses to the U.S. and global economies. It is truly a milestone in the history of the world.”

Kicking Off the Movement

H.R. 5050 was the brainchild of NAWBO (National Association of Women Business Owners), the first national advocate for women entrepreneurs. In the late 1970s and early 1980s, NAWBO members became actively interested in public policy as an opportunity to stand up and be counted as part of the business community, literally and figuratively.

“We focused on changing the equation, the ecosystem and long-held perceptions of women in business,” says Virginia Littlejohn, co-founder and president of Quantum Leaps, a global accelerator that works to create and improve policies and programs impacting women entrepreneurs. Littlejohn, one of a group of six women business owners who spearheaded the H.R. 5050 effort, has served NAWBO in numerous capacities, including 1984-85 national president. “We put our first major stake in the ground by getting involved in the 1986 White House Conference on Small Business. It educated our members about public policy issues and prepared us for our push in the 1988 presidential election year.”

Early in 1988, the House Small Business Committee granted NAWBO several days of hearings. To prepare for the hearings, Littlejohn and four of her colleagues held a “strategic slumber party” in a Virginia cabin, staying up all night to identify and define the provisions they would seek.

They also orchestrated massive media coverage of the hearings, and selected and trained witnesses who could speak eloquently about the issues. The team helped draft their testimony as well as the legislation.

Four major provisions were subsequently written into the H.R. 5050 legislation:

1. Eliminating state laws requiring a woman to have a male relative cosign for her business loan

“Although the Equal Credit Opportunity Act of 1974 enabled women to open bank accounts and get mortgages and personal credit cards in their own names, it didn’t provide for business loans because it simply didn’t occur to lawmakers that a woman might need a business loan,” says Molly Gimmel, CEO of Design To Delivery and current board chair of NAWBO National.

One of NAWBO’s witnesses, Lillian Lincoln Lambert — the first African-American woman to graduate from Harvard Business School — testified (much to the dismay of the legislators) that she had needed the signature of her only living male relative, the 17-year-old son she was supporting, to secure a business loan. (The building services company she subsequently established became a $20 million business employing 1,200 workers in four states.)

2. Requiring the Census Bureau to report on women-owned C corporations

This provision addressed another institutional bias: the idea that all women-owned companies were sole proprietorships. Prior to 1988, Census reports counted only self-employed women working at primarily home-based businesses but omitted larger companies. Knowing that this data painted an inaccurate picture, the H.R. 5050 team called for comprehensive data collection.

3.Establishing the Women’s Business Center (WBC) program

The Women’s Business Ownership Act called for the creation of Women’s Business Centers, which would provide education, resources, coaching and mentorship to help women entrepreneurs build strong, sustainable businesses. Today, the SBA’s Office of Women’s Business Ownership (also created under the H.R. 5050 legislation) oversees more than 100 WBCs nationwide, offering comprehensive training and counseling in several languages to female entrepreneurs (primarily economically and socially disadvantaged women). To date, more than 2 million women have benefited from this program.

4. Creating the National Women’s Business Council (NWBC)

This bipartisan group of women entrepreneurs and organizations would advise the president, Congress and the Small Business Administration (SBA) on policies and programs to benefit women entrepreneurs and their businesses. Today, the NWBC conducts research and provides data about women business owners to congressional offices and the media in addition to advancing policy solutions to improve opportunities for women entrepreneurs.

Strategic Approach Leads to Swift Passage

Thanks to the steadfast, strategic advocacy of NAWBO, H.R. 5050 was signed into law by President Ronald Reagan on October 25, 1988 — just 103 days after its introduction to the 100th Congress. “We were able to get this through quickly because we made it an initiative during a presidential election year,” says Littlejohn. “NAWBO has always been scrupulously bipartisan, and we position women’s entrepreneurship as an economic rather than a social issue. This proven approach helped us move our agenda forward in record time.”

After H.R. 5050 was passed, a small group of women business owners identified the need for research-based data documenting the growth of women-owned businesses. They established the Center for Women’s Business Research, which is credited with harnessing the power of data to open up access to capital, markets and networks for women business owners.

“The press release for our first major study trumpeted, ‘Women-owned businesses employ more people in the U.S. than the Fortune 500 does worldwide,’” Hadary says. “We made headlines around the globe. Suddenly, people became aware that this strong, growing body of business owners was poised to make a remarkable difference in the national and global economies.”

The Momentum Continues

This extraordinary moment in time, and the tireless efforts of these courageous pioneers, sparked a movement that continues to drive the progress of women in business. “But we cannot rest on our laurels,” Littlejohn says. “We must embrace innovation, future-proof our businesses and stay focused on growth. Women entrepreneurs should always stand at the forefront and lead the way to the future.”