Women entrepreneurs are one of the fastest-growing forces in the American economy. Yet when it comes time to scale – buying a building, expanding a facility or investing in equipment – many founders run into a familiar obstacle: access to the right kind of capital.
I am president of Small Business Growth Corporation, an SBA 504 lending expert. Here’s why the structure of financing matters and why the SBA 504 loan program has become such a powerful growth tool for women-owned businesses.
Q: Women entrepreneurs are driving a lot of economic growth right now. What trends are you seeing?
Women entrepreneurs are reshaping the business landscape in a meaningful way. Today, there are more than 14 million women-owned businesses in the United States, including about 1.4 million employer firms. That means women-owned companies represent nearly 40% of all U.S. businesses.
Across industries – from health care and child care to manufacturing and professional services – women founders are building companies, creating jobs and strengthening communities.
But what I often see is that as these businesses reach the expansion stage, they encounter a challenge that isn’t always obvious at the beginning: access to long-term growth capital.
Q: What do you mean by “growth capital”?
Early in a business’s life, entrepreneurs are often focused on startup funding or working capital…things like inventory, payroll or short-term operating needs.
But eventually, a business reaches a point where it needs to make larger investments. That could mean purchasing commercial real estate, expanding into a larger facility or buying major equipment.
Those are the types of investments that can fundamentally change the trajectory of a company.
The challenge is that many traditional financing options aren’t structured particularly well for those kinds of investments.
Q: How do conventional business loans typically work in those situations?
Most conventional commercial real estate loans require 20% to 25% down payments, often have variable interest rates, and sometimes include balloon payments after five to 10 years.
For a growing business, that structure can create pressure on working capital.
If an entrepreneur has to put a large amount of cash into a down payment, that’s capital they can’t use to hire employees, expand marketing, invest in technology or grow their operations.
So sometimes the issue isn’t whether financing exists – it’s whether the structure of the financing supports growth.
Q: And that’s where the SBA 504 loan program comes in?
Exactly. The SBA 504 program was designed specifically to help small businesses invest in long-term assets such as commercial real estate and equipment while preserving working capital.
The way it works is unique. Instead of a single lender, the financing is structured as a partnership.
Typically:
•A bank or credit union provides 50% of the financing
•A Certified Development Company backed by the SBA provides up to 40%
•The borrower typically contributes about 10% equity
•The SBA portion of the loan is fixed for 20 or 25 years, which gives business owners predictable payments and protection from interest rate volatility.
Q: That lower down payment sounds significant.
It can make a huge difference. Let me give you an example.
One project we worked on involved a professional therapy practice that wanted to expand into its own building. The total project cost was about $550,000.
Under the SBA 504 structure, the owner contributed $55,000, the bank financed half of the project, and the SBA portion covered the remaining 40%.
If that same project had been financed conventionally, the entrepreneur likely would have needed $110,000 to $137,500 up front.
That difference can determine whether a business expands now or has to wait several years.
Q: Why is facility ownership so important for many entrepreneurs?
A lot of businesses start by leasing space, which makes sense early on. But ownership changes the equation in several ways.
When you own your building, you’re turning a monthly expense into an asset. Over time, you build equity as the property appreciates.
Ownership can also stabilize occupancy costs and strengthen a company’s balance sheet, which can make future financing easier.
For many entrepreneurs, buying their facility becomes a turning point in their business journey.
Q: Why do you think this program is particularly relevant for women entrepreneurs?
Women-owned businesses are incredibly innovative and resilient, but they often start with smaller initial capitalization and may rely more heavily on personal credit when launching their companies.
Because of that, preserving working capital during expansion becomes even more important.
Programs like the SBA 504 loan help level the playing field by offering financing structures that allow entrepreneurs to invest in growth without tying up a huge amount of cash upfront.
While there are no specific rebates, fee reductions or special rates for women in any of SBA’s loan programs, SBA does help fund Women’s Business Centers, a national network of over 140 educational centers designed to help women start and grow small businesses. The federal government has a goal of awarding at least 5% of federal contracting dollars to women annually, which SBDCs can help them learn how to access.
Q: Beyond individual businesses, what kind of economic impact do these loans have?
The impact goes far beyond the individual entrepreneur.
When businesses expand their facilities, they often hire more employees, purchase more equipment and increase their economic activity in the community.
These projects can help revitalize commercial corridors, support local job creation and strengthen regional economies.
So when you help a small business access the right kind of capital, you’re not just supporting one company, you’re supporting an entire local ecosystem.
Q: For entrepreneurs who may not have heard of the SBA 504 program, what’s the key takeaway?
The biggest thing I’d say is that the structure of capital matters.
If you’re a business owner looking to purchase real estate or invest in equipment, the SBA 504 program can provide a financing structure that’s designed specifically for long-term growth.
It allows entrepreneurs to move from leasing to owning, stabilize their occupancy costs, preserve cash for expansion and build equity in their businesses over time.
For many founders, it’s the tool that turns expansion plans into reality.
Read more about Growth Corp and the SBA 504 Loan Program at www.growthcorp.com.
This article appears in Women’s Business Showcase.
