How can women overcome the obstacles of obtaining a business loan?


By ,
Ask a Lender
September 26, 2017


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Key Points

Loans for women-owned businesses

  • Studies suggest that female entrepreneurs face extra hurdles in obtaining financing.
  • Lenders are beginning to actively market loan programs to women-owned businesses.
  • The U.S. Small Business Administration has offices in almost every state where women can get advice on various targeted loan programs.
  • Credit unions have become a good source of small-balance loans for women.

As a rule of thumb, getting a business loan is challenging. For female entrepreneurs, the process can be even harder.

A battery of studies suggests that women battle a credibility gap when pitching business plans and also can experience various forms of discrimination, which makes it more challenging for them to obtain loans and raise money from investor funds.

This treatment doesn’t square with their track record of success, however.

Women-owned businesses now total nearly 10 million, accounting for more than a third of all companies in the U.S, according to the U.S. Census Bureau. A 2007-2010 survey conducted by the National Women’s Business Council also suggests that women-owned businesses perform just as well or better than male-owned businesses.

The good news is that many lenders have taken notice that women-owned business now represent an important part of the economy and are actively marketing loan programs to female business owners.

SBA programs

To level the playing field, the government has made special resources available to women entrepreneurs. The U.S. Small Business Administration’s (SBA’s) Office of Women’s Business Owners has offices nationwide where women can go to get advice on the agency’s loan programs.

The SBA offers a number of loan-guarantee programs for small businesses that can provide up to $5 million in midterm or long-term financing. These loans and revolving credit lines can be used for property improvements or to fund operations.

The SBA’s programs do carry several restrictions, however. The business has to meet certain criteria based on its size and the use of the loan.

Sources of business loans

Business loans backed by the SBA are available through traditional banks, credit unions, community banks and nontraditional lenders.

Among lenders, credit unions have proven to be a good source of small-balance business loans. Between 2011 and 2015, the outstanding balance of SBA-backed loans originated by credit unions increased by nearly 50 percent, to $1.2 billion, according to the National Women’s Business Council.

To obtain a business loan, the owner, whether male or female, typically needs good credit, a solid business plan, credible cash-flow projections, all of which will be evaluated to demonstrate an ability to repay the loan. In many cases, the lenders also will require solid collateral and personal guarantees from the owner.

Startups often can’t get business loans from traditional lenders and may have to rely on business credit cards and nontraditional lenders to get up and running.

For female entrepreneurs, it is a good idea to visit an SBA office as a first stop.


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