SBA-Backed Loans for Women-Owned Small Businesses has Surged by 70%

On the 35th anniversary of the Women’s Business Ownership Act of 1988 (H.R. 5050), U.S. Small Business Administration (SBA) Administrator Isabel Guzman released new data revealing a significant increase in SBA-backed loans to women-owned businesses. Lending has surged by almost 70%, amounting to a whopping $5.1 billion in FY23.

This legislation passed in 1988, was a pivotal moment in reshaping the American business landscape. It granted women the power to initiate businesses independently, ensuring they were no longer obligated to have a male relative co-sign a business loan. It led to the foundation of the National Women’s Business Council and the launch of Women’s Business Centers (WBCs), which play a vital role in aiding women entrepreneurs in acquiring capital, training, and counseling.

Reflecting on the legislation’s impact, women-owned firms have seen a meteoric rise, employing over 10 million individuals and contributing more than $2 trillion to the nation’s GDP annually. Notably, the growth rate of women-owned employer firms is thrice that of male-led ones.

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Administrator Guzman stressed the role of women-owned small businesses in America’s entrepreneurial surge. “Women-owned small businesses are helping to power America’s historic small business boom, and the Biden-Harris Administration remains committed to ensuring women receive the capital and resources they need to build resilient businesses and create jobs to fuel our economy.”

In a scenario where credit accessibility is becoming increasingly stringent, SBA’s lending programs emerge as a beacon of hope. They provide government-backed loans on favorable terms to bridge market gaps, ensuring small businesses are not left high and dry. Comparing the data, since FY20, there has been a 70% increase in loans to the majority of women-owned small businesses. In FY23 alone, the loan amount totaled $5.1 billion, marking a growth of over 60% under the current administration. Consequently, these businesses now constitute over one-fifth of SBA’s lending portfolio, a noticeable rise from 15.6% in FY20.

The detailed breakdown for SBA 7(a) & 504 loans to women-owned businesses from FY 2017 to FY 2023 is as follows:

  • FY 2023 observed 13,059 total loans, amounting to $5.181 billion, representing 21.3% of the total loans.
  • Comparatively, in FY 2020, total loans were 7,715, valued at $3.208 billion, and made up 15.6% of total loans.

The current administration’s strategic measures, in line with the President’s Investing in America agenda, encompass the largest expansion of WBCs in three decades and the introduction of the $100 million Community Navigator Pilot Program. Furthermore, the SBA’s primary business loan program, the 7(a) loan, offers guarantees to lenders, supporting small businesses in various capacities, with a maximum limit of $5 million. SBA’s 504 loans are designed to assist small businesses in making major fixed asset purchases, with a ceiling of $5.5 million.

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With lenders having the backing of the SBA, they are empowered to extend credit to deserving small businesses, thereby ensuring the flourishing and sustenance of the backbone of the American economy.

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