Do Men Get More SBA Loans Than Women?

The Small Business Administration (SBA) offers low-interest loans to small businesses in the United States, and they provide aid to both men and women in business lending. But do men get more SBA loans than women? Find out here!

What are Small Business Administration (SBA) Loans?

To achieve its goal of helping Americans start and grow businesses, especially those that have historically been underserved by capital markets, The Small Business Administration (SBA) provides a variety of loan products for small businesses.

One product provided by SBA is a 7(a) business loan program. The 7(a) Loan Program provides long-term, fixed-rate financing for established small businesses with creditworthy owners. Here are some other guaranteed loans from the Small Business Administration:

  • Standard 7(a) loan
  • SBA Express
  • SBA Veterans Advantage
  • CAPLines
  • Export Working Capital Program
  • Export Express
  • Disaster Loans
  • Paycheck Protection Program
  • Microloan Program
  • CDC/504 Real Estate & Equipment Loans
  • Community Advantage Loans

Keep in mind, the Small Business Administration (SBA) is an independent agency of the U.S. government created to aid, counsel, assist and protect America’s small businesses. But recent data suggests that women entrepreneurs may face unfair bias by lenders seeking to approve or deny small business loans based on gender.

How the Gender Gap Affects Small Business Loan Approvals

Banks are more likely to deny female-owned small businesses loans than male-owned businesses even when they have similar financial profiles, raising concerns about gender bias in lending practices.

Women entrepreneurs face countless hurdles when venturing into business — from building a solid reputation to getting their creditworthiness assessed, they’re up against a lot. To make this problem worse, banks and other financial institutions — the biggest financiers of small business loans — often reject applications from female business owners without sufficient reason. One study also found small businesses owned by women only receive 16% of all traditional small business loans.

Why might that be? The most common explanation is that banks and other lenders don’t give women as many SBA loans because they’re not as creditworthy. But a study published by Georgetown University in 2004 suggests another reason: The interest rates on SBA loans for women were higher than those for men. According to Lantern by SoFi, ‘”Interest rates impact all sorts of financing tools, from mortgages to credit cards, both business and personal.”

Does Gender Matter? Who gets more SBA loans?

Generally speaking, men are more likely to obtain SBA loans than women. But it’s important to point out that women in business obtain far fewer loans overall than their male counterparts.

There are many reasons for these disparities, but only 15 percent of VC partners are women. One study found that venture firms with at least one female partner had a 41 percent chance of investing in a company with a woman on its founding team—but no luck for ventures without female partners. Another report showed that interest rates on SBA loans are 0.56 percent higher for male-owned businesses than for female-owned ones.

One reason why women are more likely to be rejected or have more stringent terms than men: If you’re a woman applying for an SBA loan, you’re more likely to receive lower interest rates. Some may attribute this disparity to gender discrimination, but there are other factors at play—for instance, female-owned businesses tend to deal in industries with lower profit margins.

According to many studies, there are significant disparities in how government lenders treat female-owned businesses. However, the interest rates on Small Business Administration loans aren’t gender-specific, so men and women can apply for them at equal rates. Fortunately, solutions are in place that can help level the playing field.