Today where women-owned businesses are booming and contributing significantly to the worldwide economy, have come a long way facing all the odds of society. Today where women have all the rights to secure business loans, in the earlier times it was not this way.
In this article, we will learn how the financial journey for women has been in the past and how these have evolved in the present times. We will also learn when could women get a business loan and which Key Organizations and Programs offer loans for women-owned businesses.
Condition of Women Business Owners in the Early 20th Century
In the early 20th century, financial resources like business loans were limited to women. Women were confined to look after household chores. This was the reason why women were not considered eligible for loans by most of the financial institutions. Even if any woman managed to run a business, she still could avail of the loan services without a male co-signer (usually her father or husband).
This clearly shows managing and owning an independent business was not supported for women. The laws were limited to women, which clearly showed the societal norms. Not just this but in earlier times women were not even allowed to hold a bank account in their name without a male guardian’s permission which applies to business loans as well.
The 1960s and 1970s
The era of 1960s and 1970s saw many transformations in respect to women’s rights. Equal rights for women were demanded in all aspects of life, including finance which was backed by the feminist movement.
The ECOA or Equal Credit Opportunity Act was a significant milestone during this period in the United States. This legislation made financial services equal for all irrespective of gender, race, age, or marital status. Earlier where women needed to have a male member’s consent to obtain any loan, now changed because of ECOA. With the implementation of ECOA, business loans were accessible to all be it men or women without needing a man’s signature.
The 1980s and 1990s
After ECOA, many women-owned businesses were gradually increasing but there were still many issues that needed to be addressed like lack of credit history or collateral. There were implicit biases that slowed loan approval from several financial institutions for women.
To fill this loophole, the National Association of Women Business Owners (NAWBO) was established in the 1980’ and 1990’s to support and promote women entrepreneurs. Such organizations played an important role in women’s empowerment, providing women with financial and networking opportunities
The 2000s: A New Millennium
Finally came the 2000s which marked a new millennium landscape for women in business. With the rise of information and technology and the rise of the internet, the wave of women entrepreneurship was also rising.
Soon online business models, many lending platforms, and microfinancing emerged. This offered a lot of financial scope to access the capital required by women to grow their businesses.
Many programs to support women entrepreneurs were started by various countries like the Small Business Administration (SBA) in the United States. With the help of these programs, women were able to access better training, mentoring, and loan facilities.
Many other institutions like NGO’s and the World Bank also started offering women with microloans and other financial services. These initiatives improved the economic status of women, empowering women to start businesses.
The Present Day Environment for Women Entrepreneurs
Today there is a drastic change in the environment for women wanting to start their own businesses in order to be independent and support their families. Even the financial institutions have come up in support of women entrepreneurs by creating specialized loan schemes. This initiative is very important from an economic point of view.
There are many government-backed loan programs for women that include all the necessary resources to start or expand their businesses. Venture Capital firms and Angel investors are also investing in women-led startups, as it’s a valuable investment opportunity.
When Could Women Get a Business Loan?
As per the guidelines, Women can get a business loan when they meet the set eligibility criteria. This includes having a good credit history, a solid business plan, and sufficient collateral.
If businesswomen meet all these criteria, then they are eligible for loans for starting their new venture or boosting the existing one. Also, there are so many loan programs specifically curated for women to support women entrepreneurs.
Key Organizations and Programs Offering Loans for Women-Owned Businesses
The present-day scenario has evolved a lot. So many organizations and programs have been introduced to support women-led businesses:
Small Business Administration (SBA) Women-Owned Business Loans
The SBA loan program is an effective initiative for women entrepreneurs. To be able to enjoy the benefits of this loan program, a business must be majorly owned by a woman at least 51% and should meet specific SBA size standards.
The applicant should also possess a good credit history, a solid business plan and the ability to press the business modal to get the loan.
Grants for Women-Owned Businesses 2024
There are various grants introduced to support women entrepreneurs. The loan applicant should be a woman and should meet the industry criteria. Although, these grants are available worldwide, some of these grants are specific to some regions like Florida. These grants provide funding to women-led businesses without having to replay any amount.
Women’s Business Centers (WBCs)
WBCs or Women’s Business Centers are specially designed nationwide networks of educational centers that help in the training of women business owners. WBCs have over 100 centers across the United States, and nationwide services for all women entrepreneurs looking for business training and assistance.
Amber Grant Foundation
This particular foundation provides monthly grants of $10,000 and can be acclaimed by any women-owned businesses for various business purposes.
USDA Rural Business Development Grant
For women wanting to start their business from a small rural area, there are grants like the USDA Rural Business Development Grant. The candidates eligible for this grant are small businesses owned by women with less than 50 employees.
Conclusion
At last, we can say that the financial journey for women has not been that easy. Facing societal challenges and other issues women today have secured a secure right to financial freedom.
Today women are leading so many successful businesses all alone. This shows a remarkable change in society and how women were looked upon in the past. However, there are still many loopholes that need to be addressed at the earliest to help women empower.
This will not just benefit the women in business but it will also contribute towards the economic growth of the world.
FAQs
1. When were independent loans started for businesswomen?
Women got the right to apply for business loans independently in the United States in 1974 after the implementation of the Equal Credit Opportunity Act (ECOA).
2. What were the main barriers for women in getting business loans in the past?
Some of the barriers that came in the way of women getting business loans in the past were societal norms, legal restrictions, and the requirement of a male co-signer for every financial decision-making.
3. What was the role of the Equal Credit Opportunity Act of 1974 in supporting women entrepreneurs?
The ECOA of 1974 helped a lot in supporting women entrepreneurs by making it illegal for creditors to discriminate based on age, gender, race, and marital status. This allowed women to apply for loans without needing a male co-signer.
4. What are the loan programs available for women today?
Yes, there are many loan programs for women today offered by the government institutions of different countries like the Small Business Administration (SBA) in the US, the Women’s Economic Ventures (WEV) Loan Program in the US, Stree Shakti Package for Women Entrepreneurs (India) and many others to support women in starting and growing their businesses.
5. What challenges do women still face while availing of business loans today?
There are several challenges faced by women even today while securing a business loan today like lack of financial literacy, cultural norms, and limited access to collateral. However, the situation is constantly looked upon by the governments, but it needs to be addressed on a personal level at the earliest.