SBA Loans For Women: What You Need To Know

If you are behind one of the 12.3 million women-owned businesses that together employ millions of Americans, you are part of a force of nature. The influence of female entrepreneurs has been on the rise, with the number of women-owned businesses increasing 58% in the 11 years leading up to 2018. Therefore, it's no surprise that the popularity of SBA loans for women is also on the rise.

In fact, according to the Small Business Administration's SCORE report, women are more likely to take the plunge and launch a new business than men. Women entrepreneurs also represent 38% of all self-employed Americans. We could go on and on. 

So you wouldn't be alone if you were expecting the Small Business Administration to have specific SBA loans for women in its 7(a) program, its most widely used suite of loans. The truth is, however, that there is no specific 7(a) loan for women. Nonetheless, there is still plenty you should know about this opportunity when it comes time to accessing financing for your business.  

While the influence of women in the small business community can't be ignored, businesses owned by female entrepreneurs have lagged in sales. According to American Express, women-owned businesses generated a mere 4.3% of revenue out of the entire pie in 2019. This could have something to do with a lack of information about financing to grow their businesses. It could also be due to the absence of an exclusive, SBA women's business loan product. 

SBA 7(a) loan features 

The SBA's 7(a) loan is useful for replenishing inventory, working capital, investing in equipment, and refinancing, among other use cases. They deliver financing to entrepreneurs who have been shut out of getting a loan from other lenders. For these particular loans, the agency is more focused on whether or not business owners meet its high credit standards than any one demographic.

As such, the Small Business Administration does not have specific SBA loans for women. However, there are resources available to both improve the chances of being approved as well as to spot financing opportunities. As a result, you could increase your chances to qualify and tap into all of the benefits that the SBA's 7(a) loans have to offer. These include below-market interest rates, loan amounts up to $5 million, and terms up to a decade.

Success stories of SBA loans for women

The SBA spotlighted one female entrepreneur who had her sights set on opening her pharmacy. This entrepreneur tapped into the guidance of counselors from SBA-partner, the Small Business Development Center. With their guidance, she launched the pharmacy alongside a partner with their own money in 2003. 

Later that same year, after depleting personal resources and getting rejected by traditional banks for a loan, she was approved for a pair of SBA-backed 7(a) loans. These were worth nearly $200,000 at the time and used for startup capital and growth. 

Resources for female entrepreneurs  

The SBA is also behind the office of Women's Business Ownership. This initiative will empower women entrepreneurs to grow their business through training, education, counseling, and access to financing. The SBA has several women business centers sprinkled across the U.S. So, they could point you to financing and grant opportunities that you might otherwise miss. 

In addition, SCORE is a partnership with the SBA that supports a network of volunteers who provide free business mentoring and education to entrepreneurs. Peer support like this can go a long way for a startup or a young business. SCORE is open to both men and women business owners. It is also how Ben & Jerry's kicked things off.  

Below are a few more resources for women-owned businesses outside of SBA loans for women: 

• U.S. Women's Chamber of Commerce
• The SBA's 8(a) Business Development program. This program is for small businesses operating at a disadvantage in the marketplace. The government earmarks 5% or more of federal contracting funds for small disadvantaged businesses annually
• The National Association of Women Business Owners
• National Association of Women in Construction
• Women in the Housing and Real Estate Ecosystem

What women should know about SBA 7(a) business loan criteria 

Once you are ready, it's time to prepare your application for the SBA 7(a) loan. The entire process from application to approval could take a month or longer. The time-frame can often depend on the lender you decide to work with as the loan process isn't through the SBA itself.  

Traditional banks tend to take longer than online lenders. When pursuing SBA loans as a women entrepreneur, you should: 

• Have an operating history of more than three years 
• Generate at least $500,000 in annual sales 
• Have a FICO credit score of 680 or higher 
• Greater assets than liabilities

The future of SBA women's business loans

Women entrepreneurs are still on the SBA's radar today. A roundtable discussion for women-owned small businesses took place in June in which the agency's administrator, Jovita Carranza, participated. The event focused on the SBA's Paycheck Protection Program and the success that local business owners have had with it. While Small Business Administration loans for women don't exist as a separate loan product just yet, it's promising to see female entrepreneurs included in the discussions that could shape the future. 

Remember, the SBA — which guarantees the majority of the 7(a) loan — is interested in your ability to repay the loan – not whether you're a woman business owner. But that doesn't mean you shouldn't take advantage of all of the resources available to you along the way. SBA loans for women specifically may not exist, but there are certainly lots of avenues for funding female entrepreneurs.