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‘Bidenomics’ on Predominant Street: Lending to women-owned small businesses tops $5 billion, SBA reports

Thomas Barwick | DigitalVision | Getty Images

It wasn’t too way back that girls who needed business capital didn’t struggle to access it — they simply couldn’t get it, a minimum of not and not using a male family member to co-sign on a loan. There’s been considerable progress since 1988 when that law was modified, however the gender gap in access to capital is persistent from investor equity to bank loans.

Last 12 months, women-founded corporations received lower than 3% of the full capital invested in venture-backed startups within the U.S. Globally, the situation is much more severe, with a gender credit gap faced by women-owned small and medium sized enterprises estimated at $1.5 trillion, in response to Goldman Sachs. 

That makes the newest data from the Small Business Administration’s fiscal 2023 12 months a vital milestone to trace for the U.S. business ecosystem: Loans to women-owned small businesses topped the $5 billion mark in fiscal 2023 and now represent 1 in 5 loans (21.3%) made to small businesses. According to the Census Bureau’s most up-to-date Annual Business Survey, around 1.24 million (21.4%) of employer-owned businesses are women-owned.

The $5 billion figure for fiscal 2023 is not a peak — loan volume reached $5.7 billion in 2021 — however the Biden administration is touting the information for the 2020-2023 period as a part of its “Bidenomics” push ahead of next 12 months’s election. And the 21% mark for share of loan volume was a record.

“Women-owned small businesses are helping to power America’s historic small business boom, and the Biden-Harris Administration stays committed to making sure women receive the capital and resources they should construct resilient businesses and create jobs to fuel our economy,” said SBA Administrator Isabel Guzman in a release on Wednesday afternoon timed to the thirty fifth anniversary of the Women’s Business Ownership Act (H.R. 5050), which amongst other things, made lending directly available to female entrepreneurs. “Bidenomics is about growing our economy equitably,” she added.

According to the SBA, there have been over 13,059 SBA 7(a) and 504 loans to women-owned small businesses during fiscal 12 months 2023, up from 7,715 in 2020. The $5.18 billion in total loans was up 61% from 2020’s $3.2 billion.

While the scope of influence of girls entrepreneurs’ within the economy is difficult to trace in real time, women-owned businesses have an estimated $1.9 trillion in receipts, 10.9 million employees, and $432.1 billion in annual payroll, in response to Census, whose annual data is accessible through calendar 12 months 2020.

The SBA loan numbers come amid one of the crucial difficult credit environments in recent history, with the Federal Reserve pushing up rates of interest by greater than 5% in a 12 months, sending small business loan rates into the double-digit percentages. A survey released by Goldman Sachs 10,000 Small Businesses Voices on Wednesday reported that 78% of small business owners frightened about access to capital and over half (53%) said they can not afford a loan at current rates.

SBA’s 7(a) loan program provides guarantees to lenders that provide financing to small businesses, as much as $5 million. SBA’s 504 loans provide long-term, fixed-rate financing of as much as $5.5 million for major fixed asset purchases.

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