The growth of the U.S. economy has, in recent years, increased significantly. This trend is attributed to the continued growth of women-owned businesses, and largely, their access to business capital.

According to recent data from a women-owned company study, last year alone, a 13% increase was recorded of women-owned businesses that applied for funding. However, it was revealed that loans disbursed to men’s businesses were higher than those of their female counterparts.

In 2018, women-owned companies received $48,341 in funding for business expansion. This data was collected in over 30,000 companies across the U.S., and covered over 20 industries including, but not limited to:

  • Construction services
  • Professional services
  • Hospitality
  • Healthcare
  • Retail etc

From the data, almost one in every five loan applications was from women-owned businesses. A huge disparity compared to what men owned businesses received in terms of funding.

This loan applications by women-owned businesses were in various services, but a huge number was dispersed in service industries (19.7%). The construction industry received low funding at 6.4%.

From the figures provided by Biz2Credit, most loan applications came from five states (and most of them are concentrated in technology centers and areas where the real estate market is a thriving business):

  • Ohio 5%
  • Georgia 6%
  • New York 6%
  • Texas 11%
  • California 13%

Different factors influence this trend

A number of factors influence the loan application trends and their disbursement including the desire of women to own businesses, as well as strong economic forces. On average, according to a report done by American Express, the U.S. has reportedly over 12.3 million businesses owned by women alone.

Some forty years ago, only 402,000 women had businesses to their name across the U.S. This data represents roughly 4.6% of all firms in America. What instigates the desire in women to own businesses?

Women are willing to take risks

It is a fact that women in this age and time are more willing to take business risks, thanks to strong economic factors that have since increased optimism for aspiring business owners.

With the current economic factors favor more businesses, most people believe this is the right time to nurture and grow a business. More women-owned businesses are said to invest more in their inventory, and even recorded higher sales in the last year.

If statistics are anything to go by, over 1,000 new women-owned businesses mushroomed in the last year alone across the U.S. And 64% of those businesses were founded by women of color, this is according to a report provided by Amex-SCORE.

While these numbers are attractive, women have still a long way to go in terms of gender equality in and lending of funds.

In 2018, a research conducted by Biz2Credit revealed male-owned businesses received a significant amount of funding (over $70,239). A whopping 31% increase compared to what female-owned businesses received in the same year.

Women are better bootstrappers

Why is there a huge disparity in loan applications or funding to women-owned businesses? Part of this is largely attributed to women being better business bootstrappers. They fund businesses from their little savings. Hardly do they borrow.

So they save up money before seeking funding for their business. Suffice it to say, most of the women-owned businesses have a shorter track history of debt repayment. Therefore, chances are slim for their businesses to secure loans from various lender and investors and banks alike , however there are numerous credit matching services like this online helping women entrepreneur to secure short term loans  .

But that notwithstanding, firms led and owned by women are doing way better in regard to sales. They record more booming business compared to that of their male counterparts.

American Express carried out a report in 2017 highlighting the state of women-owned businesses. A shocking 849 new businesses opened every day across America – all owned by women. The report also highlighted a significant increase in women-owned businesses in the past two years – about 114%.

The gender lending gap

It is a fact that more businesses owned by men generate more income than what the average women-owned businesses can attain. In 2018, businesses owned by women raised revenues of up to $228,570. While in the same year, male-owned businesses reported over $440,227 increase in revenues.

That’s over 7% difference, and it’s enormous. It is true that businesses owned by women are growing rapidly. However, they’re facing stiff challenges in male-dominated industries. That means, male-owned businesses receive more funds for their business activities, and this is not about to change.

Low credit scores for women

It is interesting that most women business owners have low credit scores. And the numbers are strangely lower for women applying for loans for their businesses.

It is believed this is primarily because the number of women starting these businesses is younger entrepreneurs, and most of them don’t have debt repayment records. This affects their credit scores.

The average credit score for women in business, last year, was 588 compared to 613 to that of men in the same year. A 25-point difference that’s huge to bridge.

According to a report done by CNBC, a lot of women are laden with student loans. In fact, the majority of the student loan balance is heavily shouldered by women. Never mind, most women acquire degrees only to earn less than the average men in the same industry.

So it becomes difficult for women to repay their student loans faster than men. Besides women’s slow loan repayment, most companies owned by women are underfunded or receive less funding. This definitely lowers their credit scores, which hinders more funding for their businesses in the future.


While credit score is a huge factor that hinders the growth of women-owned businesses, there are ways to improve this – through practical actions. For instance, women can make certain to repay loans on time, utilize their credit below the 30% cap. This will definitely lower their credit inquiry.

With improved credit scores, women-owned businesses can record great success, even match the success of businesses owned by their male counterparts. This will also allow them to seek larger amounts of funding for their business, which they can then leverage to grow their businesses, increase sales and improve profits.