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. But 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 between male- and femaled-owned businesses— especially for minority women —are stark. 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 38 percent of all businesses in the U.S.
• Globally, women account for roughly one in four of all high-growth entrepreneurs.
• In 2023, 63 percent of women entrepreneurs surveyed said they expect revenue to increase in the upcoming year and 45 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. But women tend to seek funding at lower rates than their male counterparts due to the fear of getting rejected for the funds. Here are statistics on the SBA and women-owned businesses:

• 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 percent of women have sought financing to meet operating expenses.
• In 2023, 21.2 percent of federal SBA 7(a) loan funds were awarded to businesses that were more than 50 percent women owned. This is an

Gender and startup businesses

The gap in funding has not stopped women entrepreneurs from launching new businesses in a variety of industries.

The most common industry for women-owned businesses is retail, which accounts for 26 percent. Another 17 percent of women-owned businesses are in the health, beauty and fitness services industry. Most other businesses operate in food, lodging and education. The majority of women-owned businesses also give back to their communities and uplift other organizations.

According to the latest Census data, women own 1.27 million businesses in the United States. Of these businesses:

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. They can be secured with collateral or unsecured with no collateral. Small business 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. But 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.