Issue in Brief
 Prepared by the National Women’s Business Council April 2004 

Trends in SBA-Backed Financing 

to Women-Owned Businesses 

FY1998 to FY2003 

One essential element in the U.S. Small Business Administration’s (SBA) Congressionally-mandated mission to assist the Nation’s 23 million 

small businesses is to help meet their capital needs. SBA-backed financing helps provide loans to customers who might not qualify for business loans 

through normal lending channels. There are four primary types of SBA lending and equity investment programs available to borrowers: the 7(a) Loan 

Guaranty Program, the 504 Certified Development Company (CDC) Loan Program, the 7(m) MicroLoan Program, and the Small Business 

Investment Company (SBIC) Program.1 In FY2003, the SBA set a 50-year record in loans to small businesses, with a 29% increase in the total 

number of loans backed by the agency over the prior year, including a 33% increase in lending to women-owned businesses.2 

As the number, employment and revenues of women-owned businesses have increased, so has the need for financing – both to start new businesses 

and to fuel the growth of existing businesses. This Issue in Brief examines the most current information on the SBA’s loan and financing programs, 

focusing on lending to women-owned firms and drawing upon newly-available information on FY2003 results as well as data for the previous five 

years. Numbers of loans, dollars lent, and average loan value to women business owners are examined on both an absolute and growth basis, with 

comparisons made to all firms over the same timeframe. 

The State of SBA-Backed Financing to WomenOwned Businesses 

•	 In FY2003, the SBA made 16,721 loans and equity 

investments to women-owned businesses, totaling $2.4 

billion. 

•	 The share of dollars lent to women-owned businesses 

increased from 13.2% in FY1998 to 14.3% in FY2003, 

while the share of the number of loans and equity 

investments decreased 

invested in women-owned businesses by the SBA 

increased by 29.9% between 1998 and 2003, compared 

to a 20.5% increase among all businesses. Over the 

same period, the number of loans and equity 

investments grew by 40.5% among women-owned 

firms over this period, much lower than the 56.9% 

increase among all businesses. 

•	 In FY2003, the average value of SBA-backed loans 

and equity investments 

from 22.9% to 20.5% 

over the same period. 

•	 Between FY1998 and 

FY2003,the value of 

loans and investments 

to women-owned 

businesses increased at 

a faster rate than 

assistance to businesses 

overall, while the 

growth in the number 

of loans and equity 

investments made to 

women-owned 

businesses did not keep 

pace with growth 

among firms overall. 

Dollars lent to and 

22.9 

20.9 20.4 20.5 19.8 20.5 

13.2 

12.0 11.8 12.5 13.1 

14.3 

FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 

10.0 

12.0 

14.0 

16.0 

18.0 

20.0 

22.0 

24.0 

Percent Share 

Value of Loans Number of Loans 

Share of Number and Value of SBA-Backed 

Loans to Women-Owned Businesses, 1998-2003 

provided to womenowned businesses was 

$144,326, compared to 

the average value of 

$207,872 for all SBAbacked loans and 

equity investments. 

•	 Between FY1998 and 

FY2003, there was a 

7.5% decrease in the 

average value of loans 

made to women-owned 

businesses, compared 

with a 23.2% decrease 

in the average value of 

loans made to all 

businesses. 

409 3rd Street, SW, Suite 210  Washington, DC 20024  202-205-3850 (p)  202-205-6825 (f)  www.nwbc.gov 
 

 

7(a) 

7.0% 

Trends in SBA-Backed Financing to Women-Owned Businesses, pg. 2 

•	 The 7(a) Loan 

Guaranty Program is 

the largest of the SBAbacked loan and equity 

programs, in terms of 

both the number of 

loans and the total 

amount lent. In 

FY2003, the 7(a) 

program accounted for 

fully 77.8% of all SBA 

dollars lent to womenowned firms. The 504 

program accounted for 

19.8%, SBIC for 1.9%, 

and the 7(m) program 

accounted for 0.6%. In 

FY1998, the programs 

accounted for 84.0%, 

14.0%, 1.7%, and 0.3% of dollars, respectively. 

•	 In FY2003, 85.5% of SBA’s loans and investments to 

women-owned businesses were provided through the 

7(a) program. The 504 program provided 7.0% of 

loans and investments, SBIC provided 0.9%, and the 

7(m) program accounted for 6.6%. In FY1998, the 

programs accounted for 86.3%, 7.0%, 1.7%, and 4.9% 

of loans and investments, respectively. 

7(a) Loan Guaranty Program3 

•	 In FY2003, the 7(a) program made 14,300 loan 

guaranties to women-owned businesses, totaling $1.9 

billion. This accounted for 16.7% of all dollars lent 

under the program and 21.2% of the number of loans 

guaranteed. 

•	 Growth in both the 

total dollar value and 

number of loan 

guaranties from the 

7(a) program was 

stronger among all 

firms than among 

women-owned firms 

between FY1998 and 

FY2003. While dollars 

to women-owned 

businesses grew by 

20.2%, dollars overall 

grew by 25.0%. 

Similarly, the number 

of loan guaranties to 

women increased by 

39.2%, compared to 

59.2% among all firms. 

•	 In FY2003, the average 

Number and Value of value of 7(a) loan SBA-Backed Loans to 

Women-Owned Businesses by Type, 1998 guaranties provided to

Number of Loans 

7(m) SBIC 6.6% 0.9% 504 

85.5% 

7(a) 504 7(m) SBIC	 in average value among 

women-owned 

businesses was 

Value of Loans $131,212, which is 78% 

7(m) SBIC of the average value of 1.9% 504 

0.5% $167,410 for all 7(a) 

19.8% loan guaranties. 

•	 Between FY1998 and 

FY2003, there was a 

13.7% decrease in 7(a) 

7(a) average value among 

77.8% women-owned 

businesses, compared 

with a 21.5% decrease 

all businesses. 

504/Certified Development Company (CDC) Loan 

Program4 

•	 In FY2003, the 504 program made 1,163 loan 

guaranties to women-owned businesses, totaling $479 

million. This accounted for 15.1% of all dollars lent 

under the program and 16.9% of the number of loans 

guaranteed. 

•	 Growth in the dollar value of loan guaranties from the 

504 program was stronger among women-owned firms 

than among all firms between FY1998 and FY2003. 

While dollars to women-owned businesses grew by 

84.1%, dollars overall grew by 77.7%. Growth rates 

for the number of loan guaranties were similar among 

women-owned and all firms over this period (38.9% 

and 39.2%, respectively). 

•	 In FY2003, the average 

value of 504 loan 

guaranties provided to 

women-owned 

businesses was 

$460,589, which is 89% 

of the average value of 

$167,410 for all 504 

loan guaranties. 14.1 

16.4 

17.8 

16.6 17.4 16.9 

1.9 2.0 2.1 2.1 2.3 2.4 

FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 

0.0 

5.0 

10.0 

15.0 

20.0 

Dollars (Billions) 

Women-Owned Firms All Firms 

Trend in Dollar Value of SBA-Backed Loans, 

1998 - 2003 

• Between FY1998 and 

FY2003, there was a 

32.5% increase in the 

average value of a 504 

guaranty among 

women-owned 

businesses, compared 

with a 27.6% increase 

in average value among 

all businesses. 
 

 

 

 

Trends in SBA-Backed Financing to Women-Owned Businesses, pg. 3 

7(m) MicroLoan Program5 

•	 In FY2003, the 7(m) 

program made 1,110 loans 

to women-owned 

businesses, totaling $13.3 

million. This accounted 

for 43.7% of all dollars 

lent under the program 

and 45.4% of the number 

of loans made. 

•	 Growth in the dollar value 

of loans from the 7(m) 

program was strong 

among both womenowned and all firms 

between FY1998 and 

FY2003. Dollars to 

women-owned businesses 

51.9 53.5 55.2 54.9 

63.7 

81.4 

11.9 11.2 11.3 11.3 12.6 16.7 

FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 

0.0 

10.0 

20.0 

30.0 

40.0 

50.0 

60.0 

70.0 

80.0 

90.0 

Number (Thousands) 

Women-Owned Firms All Firms 

Trend in Number of SBA-Backed Loans, 

1998 - 2003 

SBIC Program6 

•	 In FY2003, the 

SBIC program made 

148 investments to 

women-owned 

businesses, totaling 

$45.2 million. This 

accounted for 1.8% 

of all dollars 

invested under the 

program and 3.1% 

of the total 

investments made. 

•	 Growth in the 

dollar value of 

investments from 

the SBIC program 

was a strong 45.4% 

among womenowned firms between FY1998 and FY2003, while the 

dollar value declined by fully 23.7% among all firms. 

However, the number of SBIC investments to womenowned businesses declined by 28.8% over this period, 

compared to 39.8% growth among all firms. 

•	 In FY2003, the average value of SBIC investments to 

women-owned businesses was $304,859, which is just 

60% of the average value of $511,312 for all SBIC 

investments. 

•	 Between FY1998 and FY2003, there was a 104.4% 

increase in the average value of SBIC investments 

among women-owned businesses, compared with a 

45.5% decline in average value among all businesses. 

grew by 147.7%, and 

dollars overall grew by 134.4%. The number of 7(m) 

loans to women-owned businesses grew by 88.5% 

over this period, compared to 97.4% among all firms. 

•	 In FY2003, the average value of 7(m) loans provided 

to women-owned businesses was $11,984, which is 

96% of the average value of $12,449 for all 7(m) loans. 

•	 Between FY1998 and FY2003, there was a 31.4% 

increase in the average value of 7(m) loans among 

women-owned businesses, compared with an 18.7% 

increase in average value among all businesses. 

SBA-Backed Loans and Financing to Women-Owned and All Firms: FY2003 

Number Dollars ($000s) 

WomenOwned 

Businesses 

All 

Businesses 

Share to 

Women-Owned 

Businesses 

WomenOwned 

Businesses 

All 

Businesses 

Share to 

Women-Owned 

Businesses 

Total 

2003 

1998 

16,721 

11,905 

81,446 

51,894 

20.5 

22.9 

$2,413,274 

$1,857,853 

$16,930,309 

$14,047,900 

14.3

13.2 

7(a) 

2003 

1998 

14,300 

10,271 

67,306 

42,270 

21.2 

24.3 

$1,876,326 

$1,561,474 

$11,267,689 

$9,016,559 

16.7

17.3 

504 

2003 

1998 

1,163 

837 

6,863 

4,930 

16.9 

17.0 

$478,527 

$259,983 

$3,161,024 

$1,778,922 

15.1

14.6 

MicroLoan 

2003 

1998 

1,110 

589 

2,444 

1,238 

45.4 

47.6 

$13,302 

$5,371 

$30,424 

$12,980 

43.7

41.4 

SBIC 

2003 

1998 

148 

208 

4,833 

3,456 

3.1 

6.0 

$45,119 

$31,025 

$2,471,171 

$3,239,439 

1.8

1.0 

Source: All data from SBA loan and financing program offices. 
 

Trends in SBA-Backed Financing to Women-Owned Businesses, pg. 4 

Conclusions and Recommendations 

•	 Both the number and the value of SBA-backed 

financing to women-owned businesses have increased 

strongly over the past five years, a trend that we look 

forward to seeing continue. However, while the dollars 

going to women-owned firms is increasing at a faster 

rate than among firms overall, the increase in the 

actual number of loans and investments to womenowned businesses is not keeping pace. We recommend 

that the SBA increase its outreach efforts to the 

women’s business community, and to the financial 

community, to encourage more participation by 

women business owners in these valuable programs. 

Given the fact that women-owned firms are just as 

financially strong and creditworthy as the average U.S. 

firm, showing no significant differences in terms of bill 

payment, financial stress, and overall creditworthiness,7 

more women business owners should be participating 

in SBA’s lending programs. The SBA should more 

strongly encourage SBA-guaranteed lenders in this 

regard. 

•	 It is encouraging to see that the diversity of SBA 

lending to women-owned businesses has increased 

since FY1998. The share of dollars coming from the 

504, SBIC, and 7(m) programs have all increased over 

the past five years. More can be done, however, to 

increase the share of SBIC investment in womenowned firms. Again, greater outreach to SBIC lenders 

and to the women’s business community is 

encouraged. 

•	 There has been tremendous growth in the MicroLoan 

program for women-owned businesses, with a 

doubling of loans made and dollars lent over the past 

five years. With this tremendous progress, we 

recommend that the 7(m) program continue to 

maintain its own identity within the range of financial 

assistance programs offered by the SBA. 

SBA Lending and Financing Programs8 

The 7(a) Loan Guaranty Program: This is the SBA’s 

primary business loan program. It is also the most flexible, 

since the agency can guarantee financing for a variety of 

general business purposes. 7(a) loans are provided by 

lenders who choose to structure their own loans under the 

SBA’s requirements, and who apply for and receive a 

guaranty from the SBA on a portion of these loans. Under 

the 7(a) program, the SBA guarantees up to $1.5 million9 

of a private-sector loan. – as much as 85% on loans of 

$150,000 or less and up to 75% on loans greater than 

$150,000. 

A key concept of the 7(a) Loan Guaranty Program is that 

the loan comes from a commercial lender, and the 

guaranty comes from the SBA. A business applies to the 

lender, and the lender decides whether to make or reject 

the loan internally, or if the application needs to be 

bolstered with an SBA guaranty. 

504 Certified Development Company Program: The 

CDC/504 loan program is a long-term financing tool for 

economic development within a community. The 504 

Program provides growing businesses with long-term, 

fixed-rate financing for major fixed assets, such as land and 

buildings. A Certified Development Company is a 

nonprofit corporation set up to contribute to the economic 

development of its community. CDCs work with the SBA 

and private-sector lenders to provide financing to small 

businesses. There are about 270 CDCs nationwide. Each 

CDC covers a specific geographic area. 

Typically, a 504 project includes a loan secured with a 

senior lien from a private-sector lender covering up to 50 

percent of the project cost, a loan secured with a junior 

lien from the CDC (backed by a 100 percent SBAguaranteed debenture) covering up to 40 percent of the 

cost, and a contribution of at least 10 percent equity from 

the small business being helped. 

The maximum SBA debenture is $1 million for meeting 

the job creation criteria or a community development goal. 

Generally, a business must create or retain one job for 

every $50,000 provided by the SBA. The maximum SBA 

debenture is $1.3 million for meeting a public policy goal. 

Expansion of small business concerns owned and 

controlled by women is included among listed public 

policy goals. 

The 7(m) MicroLoan Program: This program provides 

loans to start-up, newly established, or growing small 

business concerns. Under this program, SBA makes funds 

available to nonprofit community based lenders 

(intermediaries) which, in turn, make loans to eligible 

borrowers in amounts up to a maximum of $35,000. 

Applications are submitted to the local intermediary and all 

credit decisions are made on the local level. 

Small Business Investment Company (SBIC) Program: The 

SBIC Program helps to fulfill a small business’ need for 

larger amounts of capital – whether for start-up or growth. 

SBIC financing typically fills the gap between debt capital 

and venture capital. Licensed and regulated by the SBA, 

SBICs are privately owned and managed investment 

companies that make capital available to small businesses 

either through equity investments or loans. They use their 

own funds plus funds obtained at favorable rates with SBA 

guaranties. SBICs are for-profit companies whose 

incentive is to share in the success of small businesses. In 

addition to equity capital and long-term loans, SBICs 

provide debt-equity investments and management 

assistance. 
 

 

Trends in SBA-Backed Financing to Women-Owned Businesses, pg. 5 

All SBA loan and investment programs are managed at the 

district level. For further information, please contact your 

local SBA office. You can find your local office at 

http://www.sba.gov/ 

The National Women’s Business Council is a bi-partisan 

Federal government body created to serve as an 

independent source of advice and policy recommendations 

to the President, Congress, and the U.S. Small Business 

Administration on economic issues of importance to 

women business owners. Members of the Council are 

prominent women business owners and leaders of 

women’s business organizations. For more information 

about the Council, its mission and activities, contact: 

National Women’s Business Council, 409 3rd Street, SW, 

Suite 210, Washington, DC 20024; phone: 202-205-3850; 

fax: 202-205-6825; e-mail: nwbc@sba.gov, web site: 

http://www.nwbc.gov. 

1 U.S. Small Business Administration, “Lender’s & Equity 

Investor’s Guide”, 2nd Edition. http://www.sba.gov. 2 U.S. Small Business Administration, News Release 03-72. 

October 10, 2003. http://www.sba.gov/news/. 3 http://www.sba.gov/financing/sbaloan/7a.html 

4 http://www.sba.gov/financing/sbaloan/cdc504.html 5 http://www.sba.gov/financing/sbaloan/microloans.html 

6 http://www.sba.gov/INV/ 

7 Center for Women’s Business Research, “Removing the 

Boundaries: The Continued Progress and Achievement of 

Women-Owned Enterprises,” November 2001. 

http://www.womensbusinessresearch.org/Research/11-13-

2001/11-13-2001.htm. 8 U.S. Small Business Administration, “Lender’s & Equity 

Investor’s Guide”, 2nd Edition. http://www.sba.gov. 9 H.R. 4062 was signed into law on April 5, 2004. As a result of 

this legislation, the 7(a) loan guaranty limit was raised from $1 

million to $1.5 million.