SBA loan and startup funding for women

As of 2019, women-owned small businesses make up 49 percent of all businesses and have continued to grow. This steady rise of women-owned startups contributes to economic growth and promotes diversity, inclusion and gender equality in the business world. However, despite this growth, 25 percent of women had their loan applications denied in 2022 versus 19 percent of male-owned businesses. 

To overcome this and other funding obstacles, women can take advantage of every financing option available, like Small Business Administration (SBA) loans, crowdfunding opportunities and grants.

Female entrepreneur statistics

Although female entrepreneurs and women-owned businesses have been on the rise in the country, the disparities – especially for minority women – within the American workforce are still stark compared to male and male and female-owned businesses. Here are some statistics on women-owned businesses: 

• 22 percent of employer firms were owned by women.

• 48 percent of nonemployer firms — meaning the business had no employees — are owned by women.

• Women-owned businesses are more likely to rely on funds from personal sources, such as family and friends and savings.

• 32 percent of women-owned businesses were zero to two years old versus 16 percent of male-owned businesses. 

• Women-owned businesses make up 42 percent of all businesses in the U.S.

• Globally, women account for roughly one in three of all high-growth entrepreneurs.

• In 2022, 63 percent of women entrepreneurs surveyed said they expect revenue to increase in the upcoming year and 47 percent plan to expand their business. 

Gender and SBA loan statistics

An SBA loan is a small business loan guaranteed by the U.S. Small Business Administration (SBA) and helps cover eligible businesses’ expenses. There are multiple SBA loans available with costs ranging from $50,000 to millions of dollars.

SBA loans are available to both men and women entrepreneurs; however, women tend to seek funding at lower rates than their male counterparts due to the fear of getting rejected for the funds.

Story continues

So far in 2023, between the SBA 504 and 7(a) programs, 14,300 women-owned businesses were approved compared to the 29,162 approved men-owned businesses. 

SBA statistics

• The Federal Government aims to dole out 5 percent of all federal contracting SBA funds to women-owned small businesses each year.

• Since 2020, 13 percent of women of color have received less business-related financial assistance from banks and institutions than men.

• Women of color were denied business-related relief funds 2 to 3 more times than White or male business owners.

• More than 57 percent of microloans – from lenders that work with the SBA – are currently handled by women.

• In 2021, 38.3 percent of women-owned businesses’ total sales decreased due to the COVID-19 pandemic.

• Over 60% of women have sought financing to meet operating expenses. 

• In 2019, 5.19 percent of federal SBA funds were awarded to women-owned small businesses, increasing from 4.75 percent in 2018 and 4.71 percent in 2017.

• In 2021, 48 percent of women entrepreneurs reported cutting their own pay to keep employees on staff.

Gender and startup businesses

The gap in funding has not stopped women entrepreneurs from launching new businesses. From tech startups to creative ventures, women entrepreneurs are making their mark across diverse industries, with most businesses operating in the retail, health, beauty and fitness, business services, food and restaurant and education and training industries. 

According to the latest Census data, women-owned 1,222,102 businesses in the country. Of these businesses:

• White women-owned 1,001,816.

• Hispanic women-owned 98,915.

• Black or African American women-owned 50,292.

• Asian women-owned 170,725.

• American Indian and Alaska Native women-owned 12,351.

Startup funding tips

For many, getting started is the most difficult part of financing a startup or business venture. Thankfully, there are plenty of ways to get your feet off the ground and start your business.

Crowdfunding

According to the National Women’s Business Council, women are more successful at crowdfunding than men by 4.6 percent. This popular alternative funding method opens the door for access to capital through contributions from individuals supporting the project, business or cause. One of the main benefits of crowdfunding is that it offers a platform for women entrepreneurs to showcase their ideas directly to a diverse audience, potentially overcoming traditional barriers when accessing funding.

Business loans

Small business loans are accessible through banks, credit unions and online lenders. These loans give entrepreneurs the necessary capital to start, expand or manage their businesses.  Repayment terms, interest rates, fees and collateral requirements vary by lender, so be sure to shop around. SBA loans often come with lower rates, longer repayment terms and business-related resources and counseling.

Mentorship and entrepreneurial development programs

Women’s Business Centers offer access to a world of resources and mentorship opportunities and can expose you to financing opportunities you wouldn’t otherwise have access to.

Attend conferences, events and webinars as networking puts you in touch with industry experts. They can offer both their support and advice when it comes to financing your next venture.

Federal, state and organizational grants

Federal, state and organizational small business grants for women offer financial support without requiring repayment. Since many of these grants were created to foster economic growth by providing women and minority entrepreneurs with resources to develop and scale their businesses, it is an appealing option, especially when obtaining business credit or a loan is out of the question. However, this type of funding is competitive, so securing a grant isn’t guaranteed.

Private business grants for women

Large corporations and businesses offer business grants specifically designed to support women entrepreneurs. Many of these grants provide financial assistance as well as mentorship and resources to help women-owned businesses thrive and succeed in their respective industries.

SBA 8(a) program

The SBA 8(a) program is a nine-year program aimed at assisting small, disadvantaged businesses, including those owned by women entrepreneurs. It offers specialized support, training and contracting opportunities to eligible firms, empowering them to compete in the federal marketplace and foster long-term growth.

The bottom line

Women entrepreneurs face a lot of challenges when it comes to accessing funding to start their businesses. With dedicated programs, resources and initiatives, the SBA helps women overcome financial barriers and fulfill their dreams, making it a good place to begin your search for funding.

Frequently asked questions

• How do you apply for a women’s business loan?

  To apply for a women’s business loan, research lenders and requirements to determine which is a good fit. You can then gather the necessary financial documents, such as tax returns and financial statements, prepare a business plan and submit a loan application.

• Is it easier for a woman to get an SBA loan?

  While the SBA promotes equal opportunities for all entrepreneurs, including women, loan eligibility is based on factors such as creditworthiness, business viability and financial stability.

• Where can women get small business loans?

  Women can get small business loans from the same sources other individuals seek small business financing from. This includes banks, credit unions, online lenders and any alternative lender or lending solution as long as they meet the lender’s requirements.