Investing in equality: What loans are available for women to start a business?

7 Jul 2022

Research reveals that female-led businesses receive, on the whole, less funding than those managed by men. But why? Shouldn't industry's goal be to ensure a diverse and varied business landscape? In this article, we'll take a closer look at the problem and highlight some key finance options that every business owner can use to access finance, hopefully achieving greater gender parity.

What loans are available for women to start a business?

In 2016, just 17% of businesses in the UK were founded by women. Four years later, as revealed in a 2020 study by UENI, this figure rose to 32.37%. While it's great that more female founders are coming to the fore, there's still lots of work to do. 

The same UENI study showed that women are more likely to run one-person companies than have four or more employees. Women-led companies make up just 23.44% of businesses with a larger employee count. 

Access to business funding is one of the most significant barriers preventing women from starting a business or growing an existing one.

Published in 2019 the Rose Review found that female-led businesses receive less funding than those headed by men 'at every stage of their journey. Could access to funding could help solve the disparity?

There are many funding options for female business owners and entrepreneurs. If you're a female founder looking for finance, the amount you can borrow will depend on your credit score, turnover and other factors. You can use Funding Options to start your business funding journey today. 

Get Started

There are many ways to fund a new business; you can bootstrap it or seek angel investment. Here are a few types of business finance options you might want to explore:

1. Startup Loan

The UK Government is ambitious to increase the number of female entrepreneurs to almost 600,000 by 2030. So far, 40% of government-backed Start Up Loans have gone to female founders. 

Startup loans provide eligible new businesses with £500 to £25,000 to help get them off the ground. It's an unsecured loan and comes with 12 months of free mentoring. 

Remember that this isn't a grant: you'll have to repay the loan over a term of up to five years, and interest rates are fixed at 6% per year. Businesses that have been operating for less than two years can apply. 

2. Invoice finance

If you already run a business and late payments disrupt your cash flow, invoice finance might help take the financial pressure off. 

The lender uses an unpaid invoice as security for funding and quickly provides you with a percentage (up to 90%) of the invoice's value. This can be within 24 hours in some cases.

With invoice factoring, the finance provider will manage your sales ledger and collect payments directly from your customers. On the other hand, if you choose invoice discounting, your business will keep control of its customer payments.

Get invoice finance

3. Overdraft alternatives

Getting an overdraft facility through a lender that isn't your business bank is possible. With flexible overdrafts, you are given more control over how you access the funds, and you can turn the facility on and off as you need. 

Typically, overdraft alternatives are provided to businesses that make a turnover: the terms are based on your sales ledger. 

Get business overdraft

4. Merchant cash advance

If you require finance for your retail business – or another business type that handles customer card payments – you might be able to get a merchant cash advance. 

This is where you borrow and repay the money through a percentage of your customer card payments. So, instead of paying the same amount each month as you would with a traditional loan, repayments fluctuate in line with how much trade you do. 

Get a merchant cash advance

5. Business credit card

Business credit cards give business owners access to cash when needed. It's a type of finance that can help you manage your cash flow and keep track of business expenses. 

The lender will need to look at your credit history. If your business is relatively new and hasn't established a credit history yet, there are many steps you can take – check out these tips for improving your credit rating.

Get business credit card

Steps to getting a business loan

Both new and established businesses can sometimes find it tricky to obtain funding through a traditional bank because they're often perceived as high risk (often stricter lending criteria). The good news is that there are lots of other options in the finance market for women in business to choose from when it comes to business loans. Here's how it works:

1. Tell us how much finance you need, what it's for and how quickly you need the funds. 

2. We'll compare up to 120+ lenders and match you with the correct finance options for your needs.

3. A Finance Specialist will help you through the process, from application to receiving your funds.

Whether you need a cash injection to get your new venture off the ground or working capital to take it to the next level, start your funding journey with us today. 

Get funding




Zoe Cornish

Chief People & Operations Officer

Zoe Cornish is the Chief People & Operating Officer at Funding Options. Zoe has an extensive background in human resources and in developing and implementing people strategies within companies, covering employee engagement, performance management, organisational culture, coaching, as well as policies and practice. Prior to Funding Options, Zoe was the COO at Emerald group (acquired by Mind Tools).

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