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main street experiences the impact of bidenomics as lending to women owned small businesses surpasses 5 billion according to the sbas report 27

Small Businesses

Main Street experiences the impact of "Bidenomics" as lending to women-owned small businesses surpasses $5 billion, according to the SBA's report.

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Leo Gonzalez

April 20, 2024 - 02:45 am

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Advancement in Small Business Loans to Women

One in five small business loans (21%) backed by the U.S. Small Business Administration is now directed to women owners. This marks a significant improvement from the 1980s when women faced challenges in obtaining business loans independently.

Growth in SBA Loan Volume to Female Entrepreneurs

The total SBA loan volume to female entrepreneurs exceeded $5 billion in fiscal 2023, reflecting a substantial increase from approximately $3 billion in 2020, representing a 69% surge.

Progress Since Legislative Changes

Legislative changes, notably the Women’s Business Ownership Act (H.R. 5050), have played a pivotal role in expanding lending opportunities for female entrepreneurs. Since the amendment in 1988, progress has been evident, although gender disparities in access to capital persist across various funding avenues, from investor equity to bank loans.

Global Gender Credit Gap

Despite progress, women-founded companies in the U.S. received less than 3% of total capital invested in venture-backed startups last year. Globally, the gender credit gap faced by women-owned small and medium-sized enterprises is estimated at $1.5 trillion, highlighting persistent challenges in access to capital.

Milestone for Women-Owned Small Businesses

The latest data from the Small Business Administration underscores a significant milestone for the U.S. business ecosystem, with loans to women-owned small businesses surpassing the $5 billion mark in fiscal 2023. These loans now represent one in five loans (21.3%) made to small businesses, aligning with Census Bureau figures indicating the prevalence of women-owned employer-owned businesses.

Bidenomics Initiative

The Biden administration views the surge in lending to women-owned small businesses from 2020 to 2023 as a key achievement in its economic agenda, often referred to as "Bidenomics." The administration emphasizes equitable economic growth and remains committed to ensuring women have access to the capital and resources necessary for building resilient businesses and fostering economic prosperity.

SBA Loan Program Impact

The SBA facilitated over 13,059 loans to women-owned small businesses during fiscal year 2023 through its 7(a) and 504 loan programs, representing a substantial increase from 2020. The total loan volume amounted to $5.18 billion, a notable rise of 61% from 2020.

Contribution of Women Entrepreneurs to the Economy

Women-owned businesses contribute significantly to the economy, with estimated receipts totaling $1.9 trillion, employing 10.9 million individuals, and generating an annual payroll of $432.1 billion, according to Census data available through 2020.

Challenges Amid Credit Environment

The achievement in SBA lending comes amid a challenging credit environment, with rising interest rates impacting small businesses. The Federal Reserve's interest rate hikes have pushed small business loan rates into double-digit percentages, raising concerns about access to capital among small business owners.

SBA Loan Programs Overview

The SBA's 7(a) loan program offers guarantees to lenders providing financing to small businesses, with loans of up to $5 million. Additionally, the SBA's 504 loans provide long-term, fixed-rate financing of up to $5.5 million for significant fixed asset purchases.