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SBA Loans for Women Entrepreneurs

The number of women starting and owning businesses is on the rise, with the U.S. Census Bureau reporting that women-owned businesses increased by 45% from 2007 to 2016, a rate five times faster than the national average.

According to the 2019 State of Women-Owned Businesses Report commissioned by American Express, women-owned businesses represent 42% of all American businesses—nearly 13 million—employing 9.4 million workers and generating revenues of $1.9 trillion.

Just as with other small businesses, the right financing is an important piece of success. Here are resources available to female entrepreneurs through the Small Business Administration (SBA). Not all banks offer SBA loans, but the small business lending team at LSB is experienced and knowledgeable in SBA lending programs. In FY2020, LSB was awarded a Top Lender award from the SBA for lending to women-owned businesses!

The SBA 7a Loan Program

The 7(a) program is the SBA’s most popular program – it has been helping small businesses owners achieve their dreams since 1953. The SBA doesn’t lend money directly to a business, Instead, a participating bank like LSB makes the loan, and the SBA offers the lender a loan guarantee to offset risk.

While it isn’t targeted specifically toward women, the SBA 7(a) program has broad eligibility criteria to provide support to a wide variety of businesses. In FY2020, the SBA made $2.7 billion in 7(a) loans to women-owned businesses.  7(a) loans can offer business owners several important advantages that include:

  • The ability to obtain up to $5 million in capital.
  • Long-term fixed interest rates that are competitive,
  • Longer repayment terms, up to 25 years based on the use of proceeds.
  • Lower down payment requirements.
  • The ability to obtain financing for a flexible variety of purposes, including for expenses not fully secured with collateral, such as startup costs, working capital, leasehold improvements, or technology investments.

The SBA Express Loan Program

An SBA Express Loan is part of the 7(a) program. It accommodates lower loan amounts and comes with a faster turnaround time of 36 hours from application submission. Like the standard 7(a) program, it is not geared specifically toward women, but has the same broad eligibility criteria.

An Express Loan has many of the same features and benefits as a standard 7(a) loan, but the maximum loan amount is $500,000.

The SBA 8(a) Business Development Program

The 8(a) Business Development Program is not a loan or business financing, but instead, provides the opportunity for the socially and economically disadvantaged to obtain government contracts.

The federal government has set a goal to award at least five percent of contracts to small disadvantaged businesses. The government limits competition for certain contracts to businesses that have obtained an 8(a) certification.

The government defines socially and economically disadvantaged in Title 13 Part 124 of the Code of Federal Regulations. Typically, this includes members of certain racial and ethnic groups, but any individual can establish a case for disadvantage based on a characteristic or circumstance that is beyond their control such as gender, origin, or disability.

Additional criteria to qualify for certification includes having a personal net worth of $750K or less, adjusted gross income of $350K or less and $6 million or less in assets.

To apply for 8(a) certification, use the certify.SBA.gov website. Certification lasts for a maximum of nine years, and you will need to complete annual reviews to remain in good standing.

Women-Owned Small Business (WOSB) Federal Contract Program

Like the 8(a) program, the WOSB Federal Contract Program does not provide a loan or financing but sets aside dollars to award contracts to women-owned small businesses in industries where firms are underrepresented. WOSBs must be at least 51% owned and controlled by women.

To participate, a business must obtain official certification as a WOSB. A business can self-certify for free online, or may enlist support from a third-party certifier. A third-party certifier will typically charge a fee, but they will also assist with determining eligibility and thoroughly reviewing the required documentation prior to submission to help ensure it complies with statutes.

The four organizations approved by the SBA to provide third-party certificates are:

  • El Paso Hispanic Chamber of Commerce
  • National Women Business Owners Corporation
  • U.S. Women’s Chamber of Commerce
  • Women’s Business Enterprise National Council

If you’re a female founder or aspiring entrepreneur, LSB would love to support your business goals. Contact our experienced small business lending team for more information about SBA loans!


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