Business loans for women

Business loans for women  

About a third (35%) of businesses in Australia are owned or operated by women. Despite this, access to finance is still the main barrier to growth for women-led small businesses. This guide covers the best finance options for women in business.  

Key points about business loans for women 

• The median business loan amount requested for women is $45,000 and $50,000 for men (10% more), according to Lend proprietary data
• Small businesses led by women still struggle to access finance, compared to small-to-medium enterprises (SMEs) led by men
• The top industry where women apply for finance is hospitality, followed by professional services 
  

How to qualify for a business loan 

The minimum criteria to qualify for a business loan in Australia include:  

• Australian citizenship or permanent residency
• An active ABN or ACN (including sole traders and self-employed individuals)
• Between six and 12 months of trading history
• Minimum monthly revenue of $10,000
• Proof your business can repay the loan or collateral
• A good credit score — the minimum credit score for business lending is around 400. 
  

How do small business loans for women work? 

Small business loans for women work the same as other types of commercial finance. You borrow money from a lender or bank and repay it over a period of time with interest. Business loans are either secured — when you offer collateral as security for the loan — or unsecured. Small business loan interest rates range from 10-25% p.a., depending on the type of finance you choose and whether you provide security for the loan.

Obtaining business finance with a non-bank lender is easier because they have more lenient lending criteria and faster application processes. They use technology to assess your business profile, credit report and business bank transaction data. Alternatively, you could search for lenders specialising in lending to businesses in your specific industry (e.g. retail, healthcare) or committed to supporting companies within your local community.

Getting a startup loan is more difficult as most lenders require you to have been in business for at least six or 12 months before offering you finance. 

Banks have stricter lending criteria and prefer to lend to more established businesses with a good credit history and a proven record of profitability. In either case, your gender should play no part in the loan assessment process. 

How much can you borrow with a small business loan?   

In Australia, the median business loan amount requested for women is $45,000 and $50,000 for men (10% more), according to Lend proprietary data. Your individual borrowing capacity will depend on your business revenue, trading history and whether your loan is secured or unsecured.  

• If you opt for an unsecured business loan, you could borrow between $10,000 and $500,000
• You could borrow up to $5million with a secured loan (with collateral)  
  

Use our business loan calculator to determine how much you can borrow.  

Small business loans for women 

Here are the most common financing options to consider for women with a small business: 

1. Secured business loan: A secured business loan is always cheaper than other types of finance. That’s because the loan is secured against an asset — usually property — which reduces the risk to the lender. This allows you to get better rates on your loan, and to borrow a larger amount over a longer loan term (up to five years). However, the lender can reclaim your asset if you default on the loan. 

2. Unsecured business loan: An unsecured business loan doesn't require collateral but comes with higher interest rates to reflect the risk to the lender. You’re also limited in how much you can borrow and terms on the loan are shorter. 

3. Business overdraft/line of credit: A business line of credit or business overdraft is linked to your business transaction account and allows you to access a predetermined amount of money whenever you need (up to your credit limit). The main benefit is that you only pay interest on the amount you borrow, not the entire credit limit. 

4. Business credit card: A business credit card is also an ongoing credit facility that provides access to funds on demand, up to an agreed limit. Business credit cards offer interest-free periods (up to 55 days) and rewards on eligible business purchases.  

Other business finance options for women  

There are also some alternative finance options available for women in business: 

Equity or investor finance: Involves finding an investor (or multiple investors) willing to finance your business in exchange for an equity stake in your business. This means you’ll give away some ownership of your company and have to share the future profits of your business with investors. 

Crowdfunding or peer-to-peer lending: Involves harnessing the power of social media and the internet to raise money for your business venture. The main difference between crowdfunding and peer-to-peer lending is their funding structure. Crowdfunding is typically equity-based, while peer-to-peer lending is loan-based. 

Women in business industries & trends 2023  

According to proprietary Lend data, here are the top industries for women-owned businesses that apply for finance. 

• Hospitality: 19%
• Professional services: 16%
• Construction & trades: 14%
• Retail: 11%
• Health & beauty: 8% 
  

How to apply for a business loan 

1. Choose your loan product and lender 

The first step is to decide which type of business loan you want to apply for and which lender you want to go with. The best business finance option will depend on: 

• How much you want to borrow
• If you can provide collateral for the loan
• What the funds will be used for
• The stage of business development (e.g. startup or established business)

Don’t submit loan applications with multiple lenders as this could hurt your credit score.  

2. Prepare a business case

If you’re a small business owner or one-woman band with no assets to provide as collateral, you should prepare a business plan that shows your business strategy and goals for the next three to five years. You can include cashflow projections, interim financial statements, contracts and customer agreements. Have an accountant validate your financial forecasts.  

3. Provide supporting documents 

You'll need to supply financial documents demonstrating your ability to repay the loan. Most lenders will look at your business revenue and will ask for the following supporting documents when you make your application: 

• Bank statements from the last six to 12 months
• Business registration and tax information (e.g. BAS statements, tax returns)
• Identification documents  
  

4. Understand your interest rate 

You may not be able to secure finance at the rate you’ll see advertised. Lenders will assess your personalised interest rate based on your personal and business credit rating, your business revenue and history, your industry and market position, etc. Interest rates on business loans are calculated largely based on risk. The lower the risk for the lender, the lower your rate.

Each lender will have a different risk appetite, and many prefer businesses in specific industries or with a particular business model, so you may be able to access a better deal if you find a lender that’s a good fit for your business.

5. Apply for the loan

Most business loan applications are submitted online and can be completed within 10 minutes or less. Simply fill out the application form with your personal and business details and your reason for borrowing, upload your supporting documents and submit.

Non-bank lenders can usually give you pre-approval on the same day, and you can have the funds in your account soon after that. Some lenders may follow up with a call from a lending advisor to talk about your needs or gather more information. 

What business grants are available to women? 

Several federal, state and local grants and funding programs are available specifically for women entrepreneurs and business owners. For example, the Boosting Female Founders Initiative helps female entrepreneurs access funding for their startups, while the Women in STEM and Entrepreneurship (WISE) grant provides up to $1 million to expand successful projects. Here are some popular state-based grants for women in business:

Backing Female Founders Program (QLD). This program invests in female founders to start and grow their businesses.

Women in Business Networks Grants (NSW). This grant provides funding for women who run small businesses. 

Alice Anderson Fund (VIC). Helps women-led startups now access early-stage capital with co-funding from LaunchVic. This fund can invest between $50,000 and $300,000 in early-stage deals. 

Women's Grants for a Stronger Future (WA). Offers grants of up to $100,000 for projects advancing gender equality. 

Women in Business Program (SA). Helps female business leaders secure funding opportunities to grow their businesses. 

You can search for government grants and programs across Australia via the Business.gov.au grants and programs finder.

Women in business: The state of play in Australia 

According to Australian Bureau of Statistics (ABS) data, the number of women business operators in Australia increased by 46% in the last two decades. However, small businesses led by women still struggle to access finance, compared to SMEs led by men, according to the Australian Small Business and Family Enterprise Ombudsman. For example, only 5% of female entrepreneurs (versus 28% of men) believe they can access suitable business financing. 

The gender gap extends to business finance applications, with women business owners typically asking to borrow $45,000, 10% less than male business owners who ask for up to $50,000. Literature on gender differences when accessing finance suggests female entrepreneurs are more risk-averse than their male counterparts. Women may be more reluctant to use personal assets as security or need more adequate collateral. According to Experian, average business credit scores for men and women-owned businesses are on par. 

There are more women in business in Australia than ever, but many also manage households and other priorities. Obtaining business finance online with an application process that takes only minutes, without collateral, and with potential same-day approval offers women business owners the flexibility to focus on critical priorities.  

Sources: 
1. Proprietary data of small businesses operated or managed by women who applied for finance through Lend.com.au and who have been operating for at least five years (2023). 
2. Australian Bureau of Statistics (ABS), Business indicators (2023). 
3. Australian Small Business and Family Enterprise Ombudsman, Access to capital still a barrier for women-led small businesses. 
4. Experian, The state of women business owner credit.