SBA Micro Loan For Women Entrepreneurs

As a woman small business owner, have you faced difficulty in raising funds? Or maybe you want to start a business, and you need money to do so? The sad reality is that women have a much harder time securing business loans than male business owners. Access to loans, grants, or funding is extremely important for businesses owned by women. However, studies show that only one in four women actually apply for business loans. Moreover, the women who do, ask for almost $ 35000 less than their male counterparts.

Microloans are an affordable way to secure loans for women. They are a smart option, and women can get their businesses up and running with the right funding. There are some unfair differences between the funding for men and women-owned businesses. The government small business loans for women, supported by SBA and some other alternative lenders, have reduced the differences and made it easier for women business owners to obtain funding.


Problems With Funding Businesses Owned By Women

Many reports over the years have shown that the true potential of women entrepreneurs has not been realized fully. In the last few years, there has been a rapid growth in women-owned businesses. Despite this, a big revenue gap exists between all businesses and women-owned businesses. This may reflect the complex financial and societal patterns, but the differences only make the situation worse. If a women-owned business does not generate high revenue, then it becomes difficult to sustain or thrive. Lenders are hesitant to give even small loans. The studies show that:

  • Men seek out loans for their businesses more than women.
  • Men are more likely to receive loans and funding
  • Women rely more on credit cards to fund their businesses

Can Micro Loans Help Close The Gap?

There is no doubt that the funding opportunities for women-owned businesses need to improve. The good news is that even if the traditional lenders are not doing enough, there are several start-up business loans available for women to help them fund their business or start their own business. Microloans are available through non-profit organizations. These are specialized business loans usually disbursed through community-based organizations. The US Small Business Administration (SBA) is one such organization that gives microloans to business owners who cannot raise funds from traditional lenders. Microloans provide start-up funding as well as help in mentoring, educating, and training new business owners. Women need microloans to get their businesses off the ground and make them succeed.

SBA Microloans For Women-Owned Businesses

SBA microloans provide funding opportunities to small business owners who face difficulties while looking for funding. Minority entrepreneurs, low-income individuals, veterans, and women business owners get a good deal with the SBA microloans. Although there are no specific start up business loans for women, the SBA microloans are perfect for them. They get great payment terms and low-interest rates, which are better than most other competitors. Moreover, SBA loans for women can be used for varied purposes. Certain microlenders lay down restrictions about the way the funds can be spent. With an SBA loan, a qualifying entrepreneur may use the funds to purchase inventory, pay employees, buy office supplies, continuing education, and much more.

SBA guarantees loans for small businesses but does not directly pay the loan. It uses intermediaries who issue the loans. As a guarantor, SBA pays a part of the loan if the borrower defaults. This encourages the lenders to work with small business owners. Women can benefit from the SBA microloans. They can get a loan amount of up to $ 50000 to start a new venture or expand their business.

To qualify for a microloan from SBA, women business owners need to find an SBA lender and then meet all the requirements laid out by the lender. The requirements vary from lender to lender, and it is important to compare and see which one is most suitable. The SBA only establishes some parameters in regards to the interest rates and loan uses. The intermediaries are left to decide the terms and, more importantly, who shall receive the microloans.

Repaying the loan

To a borrower, the main question is, ‘how to get a start up business loan?’ To the lenders, what matters most is the ability of the borrower to pay back the loan. It does not matter if it is a woman or a man. The question they ask you is, ‘Can you pay back the loan on time?’ You need to show the lenders your ability to repay, and you can do this by

  • Showing the existing cash flow of the business
  • If there is no revenue, show the financial projections

To qualify for SBA microloan, business owners have to submit a business plan. A detailed business plan convinces the lender to put his trust in you and your business and hand you the funds. A business plan must include

  1. Your personal and business background
  2. The value proposition of your business
  3. Analysis of competitors and markets
  4. Marketing strategies
  5. Financial statements or/and financial projections for the next 3 to 5 years

Advantages and disadvantages of SBA microloans

SBA microloans are an affordable source of funding for business owners looking for a small amount and may have failed to get it from other sources. However, they have their pros and cons.


  • Great funding opportunity for women, minorities, veterans, etc.
  • Start-ups and established businesses are eligible
  • A good option for people with short credit histories
  • Low-interest rates
  • Long repayment terms


  • The loan amount cannot be used for real estate purchase or debt refinancing
  • Unsuitable for entrepreneurs who need more than $ 50000
  • The process can take up to several weeks
  • Require detailed business plans
  • Need collateral and even a co-signer if the borrower has a bad credit history


Though big strides have been made as far as equality between men and women-owned businesses is concerned, it is still tough to raise money for women. The great thing is that even if traditional lenders are not supportive, there are some great options for minority business loans and grants to choose from. Microloans help in leveling the field for women and other disadvantaged business owners. Women entrepreneurs can go on to achieve great things if given support at the right time.

Also read: Why You Should Start Your Small Business Now