Women today have come very far in terms of gaining more financial freedom and starting more businesses than in the last 30 years. Women are now leading the way of new businesses each year compared to men.
Until the late 1980’s women need a man to be a co-signor on a loan; it’s true. Over the last 10 years women now make up almost 50% of the small businesses in the United States and account for over 30% of business loans and short-term loans. The average sized loans for women business owners is below twenty five thousand dollars because their businesses tend to bring in revenues below three hundred and fifty thousand yearly.
This gender gap in lending can be attributed to a variety of factors. Factors include differing economic circumstances, labor market experiences, attitudes toward lending and differing treatment by lenders and financial institutions.
Women face more challenges every day in their business compared to men but still women owned businesses are on the rise. The problem still is most women owned business have harder time getting approved for loans.
Some facts to understand women and business loans
- Men and women almost have identical credit scores.
- The average credit score rose to almost 600 for women in late 2021
- Men still make up three quarters of the loans being applied.
- Women-owned businesses earned under $500,000 less compared to men
- The average loan amount for women-owned businesses was 33 percent lower than male-owned businesses in 2021.
- The number of women owned businesses grew 14% since 2019.
- Minority owned businesses grew 21% since 2014.
- In 2019, businesses owned by women of color accounted for 50 percent of all women-owned businesses
- Women of color accounted for only 23 percent of total revenue created by women-owned businesses in 2019.
- Women may have a harder time getting business loans than men for several reasons, including challenges in building credit, industry and investor bias.
- Women-owned businesses also tend to be smaller businesses since women have only recently had access to the marketplace.
How Women are building more credit
- Up until 2021 men always had higher credit scores but have changed now into 2022. Both men and women have identical credit scores. However, men still are more credit worthy than women.
- While women’s earnings have increased considerably in recent years, women still are not getting the credit they deserve while opening a business or applying for a business loan, but in 2022 that’s changing rapidly. It’s likely that this, combined with women’s relatively short lending history, can take a toll on their ability to build credit.
Short term Micro Loan s for women under $25,000
Microloans allow small businesses to take out smaller loans at lower interest rates and are generally easier to qualify for than traditional business loans.
Empowerlend has found that microloans are crucial for small businesses that may not qualify for funding elsewhere. Empowerlend uses AI technology to provide better solutions for small businesses. Its mission of EmpowerLend to help under-resourced and under-funded businesses succeed. The Empowerlend programs for small businesses can get women owned and other businesses, microloans from $5,000 to $100,000.
The most important thing about microloans is it’s a lot easier to get approved and help your business right away. Going to your bank now is more difficult and they only offer secure money vs unsecured money. Microloans only need bank statements to get you money very fast. Most small businesses, especially in the first few years, don’t have all the right tools in place to be organized for large loan so these microloans give them the advantage they need to succeed.