What are business loans for women?
Business loans for women are financing options designed to help female entrepreneurs and business owners access the funding they need to start, grow, or stabilise their businesses.
While there are very few loans in the UK that are exclusively available to women, there are lenders and schemes that encourage and support applications from female-led businesses.
In reality, a business loan for women is the same as any other commercial loan. What makes this type of finance distinct is its focus on ensuring women in business have equal access to lending and additional support, such as mentoring, networking, or tailored resources.
Why business funding for women is important
Access to finance is one of the biggest barriers for women starting or growing a business in the UK. Just 18% of companies in the UK are led by women, and research shows that female entrepreneurs are less likely to apply for external funding.
Female-led businesses already contribute more than £100 billion to the UK economy each year. But, according to the Rose Review, if women had equal access to funding, up to £250 billion of additional economic value could be unlocked.
Ensuring women have fair and flexible routes to finance isn’t just about supporting individual entrepreneurs, but also strengthening the UK economy as a whole.
Challenges faced by female entrepreneurs
Although the UK has made progress in encouraging female entrepreneurship, many women still face challenges when seeking financing for their businesses. Common barriers include:
- Funding gap: Women receive significantly less funding than male entrepreneurs. The Investing in Women Report 2023 showed the average amount approved for women-led businesses was £174,000, compared to £507,000 for male-led firms.
- Social norms: Starting and running a business is often perceived as a male activity, reinforced by the imbalance between the number of female and male entrepreneurs. This can discourage some women from pursuing entrepreneurship.
- Work-life balance: The Rose Review found that women are twice as likely as men to cite family responsibilities as a barrier to starting a business. Female entrepreneurs are also more likely to shoulder care responsibilities alongside running a business.
- Access to support: Female entrepreneurs are less likely to have access to established business networks or mentors. With fewer peers and role models, networking opportunities are harder to develop for women entrepreneurs.
Acknowledging these challenges is the first step towards overcoming them, whether by accessing inclusive lenders, leveraging government schemes, or building supportive networks that enable growth.
Types of business loans for women
Female entrepreneurs in the UK have access to the same range of business loans as other business owners. Still, some lenders and schemes actively promote their products to women-led businesses. The main options include:
- Secured loans: Funding is backed by assets such as a UK property, and they can offer larger loan amounts and lower interest rates due to the lower risk to the lender.
- Unsecured loans: These loans don’t require collateral, so they are an option if you don’t own property. Interest rates can be higher, but they may be suitable for newer businesses or those with smaller borrowing needs.
- Revolving credit facilities: This funding option is similar to an overdraft, as it offers flexible access to funds up to a set limit. You only pay interest on the money you use, and the credit limit is replenished as you repay.
- Merchant cash advances: This is an advance you receive based on your business’s card sales. You make repayments automatically through a percentage of your card transactions.
- Invoice finance: This option enables you to unlock cash tied up in your unpaid invoices. This is particularly useful if you offer services in an industry with long payment cycles and need to maintain a stable cash flow.
Small business grants for female business owners
Alongside loans, female entrepreneurs may be eligible for small business grants. Unlike loans, grants do not need to be repaid, making them an attractive funding option.
Most UK business grants are open to all entrepreneurs, but there are a small number of programmes specifically designed for women.
A leading example is the Women in Innovation Awards, run by Innovate UK, which provides £75,000 in grant funding alongside mentoring and business support for successful applicants.
Applying for a grant is often competitive, but combining grant funding with a business loan can provide a strong financial base without over-reliance on debt.
Support for female entrepreneurs
Finance is only one part of the picture. To overcome some of the barriers female business owners face, support is available, such as:
- Mentoring: Schemes like the Santander Women Business Leaders’ Mentoring Programme can match you with a suitable mentor.
- Networking: Women-focused business networks, such as the Women in Business Network, can provide valuable advice, connections, and peer support.
- Government initiatives: Initiatives such as the Investing in Women Code encourage lenders to improve access to finance for female-led businesses.
By combining financial support with mentoring and networks, female entrepreneurs can build more resilient and scalable businesses.
Eligibility for women’s business loans
Eligibility for business loans varies among lenders, but the typical criteria remain the same regardless of gender. You’ll need to show that you:
- Are over 18 and based in the UK
- You own or manage a registered business that has been trading for at least three months
- Your business has a minimum level of turnover, e.g. £8,000 a year
- Can demonstrate your ability to repay the loan
Some specific schemes may have additional requirements you will need to meet to be eligible.
How to choose the right funding for your business
Choosing the right loan depends on your business goals and financial circumstances. When considering your options, think about:
- What you need the loan for: Whether the funding is for getting off the ground, growth, or managing cash flow.
- Loan amount: How much you need and whether you can realistically repay it.
- Term length: Short-term loans may help cash flow needs, while longer terms are better for spreading the costs of larger investments.
- Cost: Consider interest rates, fees, and the overall repayment amount.
- Flexibility: Some lenders allow early repayment or offer payment holidays.
Taking the time to compare lenders and products will help ensure you choose finance that supports your business without becoming a burden.
How to apply for a business loan for women
Applying for a business loan with Aurora Capital is a quick and straightforward process. You just need to:
- Complete an online application: Enter your business details, turnover, and how much you want to borrow.
- Submit the necessary paperwork, which typically includes bank statements from the last 3–6 months and a valid form of identification.
- Receive a decision: Applications can be processed quickly, and you can receive a decision and agreement within 24 hours.
- Access the funds: Once approved and you’ve signed the agreement, the loan is paid into your business account, often within 48 hours.
You can start your business loan application with Aurora Capital today. You can get a free, no-obligation quote, and applying won’t impact your credit score.
