Female led businesses are an increasingly powerful part of the UK economy.

Women are starting companies in record numbers, contributing billions to national output and employing millions of people. Yet despite this progress, access to finance remains a consistent barrier to growth for female led businesses.

For SMEs and future founders, understanding the realities behind the headlines is important. The data shows progress, but it also highlights structural challenges that still need to be addressed.

This article examines the current landscape for women in business and answers key questions around finance access. We explain why invoice finance solutions are becoming an important part of the conversation.

The Growth of Female Led Businesses in the UK

It is difficult to pinpoint the first UK female led business, but records show that women in London were running businesses as early as the 18^th century. Do not worry, logic dictates that women were proactive long before this period in time. Before we continue with the present, we must discuss women who set the pace. The Sleepe Sisters.

The Sleepe sisters: Martha, Ester, and Mary. They learned how to manufacture and produce fans from their mother. Their mother made the fans, ran the shop, and beared 15 children. For 35 years Marthe Sleepe, produced and sold her own fans within St Paul’s Churchyard. The University of Cambridge exhibition London’s forgotten businesswomen explored exactly what the title dictates. Within this, Dr Erickson says: “These City businesswomen prospered and practiced a range of occupations in a way which would have been inconceivable in the middle of the 20th century. Historians still don’t understand exactly how or why women dropped out of the management of manufacturing and commerce.”

Women now represent one in three UK entrepreneurs. This reflects a 36 percent increase in business ownership since 2015. According to the Rose Review Progress Report 2024 and ONS Business Population Estimates 2025, if women started and scaled businesses at the same rate as men, it could add £250 billion to UK Gross Value Added.

There are now 1.8 million women running incorporated or self-employed ventures across the UK, the highest share on record. Women also employ an estimated 2.7 million people through their SME employer firms, contributing over £250 billion to the UK economy each year. These figures demonstrate that female led businesses are not a niche segment. They are a central part of economic growth.

Representation at senior levels has also improved. Women now hold 43% of FTSE 350 board positions, according to the UK Government FTSE Women Leaders Review 2024. This reflects progress in leadership visibility and corporate governance.

However, the picture is not uniformly positive. The share of women led employer SMEs has fallen from 19% to 14% since 2021. This equates to an estimated loss of 70,000 firms, based on the Longitudinal Small Business Survey 2023. While entrepreneurship is rising overall, employer scale businesses led by women have declined in proportion.

Older women are also becoming more active in enterprise. Women aged 50 and over are now the fastest growing group of entrepreneurs, accounting for one in four female business owners. This shift reflects changing career paths and later life entrepreneurship.

The data tells a clear story. Women in business are contributing significantly to the UK economy. Yet scaling and sustained growth remain challenges.

Entrepreneurship Activity and Gender Gaps

Entrepreneurship activity among women continues to increase, but it still lags behind that of men. Between 2019 and 2023 across OECD countries (according to the Global Entrepreneurship Monitor): for every four men reported working on a start-up or managing a new business, there were three women doing the same.

Women entrepreneurs are also, on average, slightly less likely than men to pursue economic opportunities through their businesses rather than operating out of necessity. Between 2019 and 2023, women entrepreneurs were around 5% less likely than men to pursue opportunity driven ventures. Among growth oriented entrepreneurs, women were about 41 percent less likely than men to expect that their business would create at least 19 jobs over the next five years.

There has been progress. The gender gap in start-up rates reduced in 25 of the 34 OECD countries between the periods 2014 to 2018 and 2019 to 2023. The United Kingdom was among the countries showing significant progress.

However, differences remain. These are influenced by attitudes towards entrepreneurship, labour market participation, availability of resources, and structural barriers. Barriers are often interconnected. For example, gender norms affecting career progression can influence network access, which in turn impacts funding opportunities.

Is It Harder for Women to Get Loans?

Yes, the evidence suggests that access to finance remains a significant challenge for female led businesses.

Data from the World Bank Enterprise Survey shows that in 2024: Women were about half as likely as men to report that they had secured funds from a bank to start, operate or expand their business. This gender gap was observed in almost all OECD countries.

Several factors contribute to this:

Women often report having less collateral and lower personal wealth.
They may have more limited credit histories.
They frequently request smaller funding amounts, which can carry higher proportional administrative costs for providers.

Institutional and market failures also play a role. Research highlights documented bias in lending and investing processes, including gender stereotyping and bias in credit scoring and risk assessment models. A lack of women in decision making roles within financial institutions can reinforce these challenges.

When women entrepreneurs do secure funding, studies indicate they often receive smaller amounts and, in cases, less favourable terms. Globally, women receive only around 2 percent of total venture capital investment. In the UK specifically, female founders secured only 1.9 percent of total venture capital investment in 2024, according to the British Business Bank UK VC and Diversity Report 2024.

It is important to recognise that differences in growth orientation also account for part of the venture capital gap. Research suggests that a significant proportion of the difference in venture capital outcomes is linked to differing growth expectations between male and female founders.

Nonetheless, access to finance remains one of the most cited barriers limiting the growth of women in business.

Why Do Many Small Businesses Find It Difficult to Obtain Bank Loans?

Businesses do find it difficult to obtain bank loans because of ridged funding terms. The challenges faced by female led businesses reflect broader issues within SME finance.

Small businesses often encounter:

Rigid risk models.
Sector biases.
Strict collateral requirements.

Limited appetite for early stage or non-traditional business models.

Traditional funding structures are frequently designed around asset security and historical trading performance. Newer businesses, service based models, or those operating without significant physical assets can struggle to meet these criteria.

Women consistently report difficulty navigating fragmented funding sources. The system can appear complex and disjointed, particularly for founders without established networks within mainstream finance.

The concept of the discouraged borrower is also relevant. Some entrepreneurs choose not to apply for finance because they believe they will be declined. Research indicates that women are more likely to fall into this category.

Policy responses increasingly focus on improving data collection, including gender disaggregated reporting, and expanding targeted finance programmes. The Women Entrepreneurs Finance Code and the G20 Global Partnership on Financial Inclusion have emphasised the need for better data and systemic change.

Loan guarantees, microfinance, publicly supported equity funds and fintech innovation are all part of the broader policy toolkit. However, the impact of these measures depends on effective targeting and accessibility.

Working Capital and Alternative Funding Solutions

For many SMEs, the challenge is not only securing funding, but also managing day to day cash flow.

Late payments continue to affect thousands of UK businesses. When access to traditional finance is limited, predictable cash flow becomes even more important.

Invoice finance is one example alternative funding that operates differently from traditional bank facilities. It releases cash that is already tied up in issued invoices, providing funding that scales with turnover. Because it is linked to trading activity rather than solely to balance sheet strength, it can be more accessible to businesses that are growing but asset light.

For female led businesses seeking to scale, stabilising cash flow can be a practical step towards sustainable growth. Invoice finance can support payroll, supplier payments and reinvestment without waiting for extended customer payment terms.

Importantly, invoice finance should be understood as a structured working capital solution rather than a last option. When used strategically, it supports growth planning and financial predictability.

Addressing Structural Barriers

The financing gap for women in business is not a single issue. It reflects a combination of structural, cultural and market factors.

Improving access requires:

Better data and transparency.

Product design aligned with diverse business models.

Stronger networks between entrepreneurs and finance providers.

Greater representation of women in financial decision making roles.

Complementary non-financial support such as leadership development and investor readiness training.

Governments across OECD countries increasingly adopt multi-pronged strategies that combine financial instruments with education, regulatory reform and cultural change.

The private sector also plays a critical role. Financial institutions, investor networks and fintech platforms can shape outcomes through product design and internal governance.

Conclusion Female Led Businesses

Female led businesses are a growing and influential force within the UK economy. Women in business are contributing at scale, employing millions and generating significant economic value.

Yet access to finance remains one of the most persistent barriers to growth. Evidence shows that women are less likely to secure traditional bank finance, receive a smaller share of venture capital investment, and face structural challenges linked to collateral, networks and bias.

For SMEs and future founders, understanding the finance landscape is essential. Strong working capital management, awareness of available tools, and engagement with transparent funding partners can all support sustainable growth.

The progress is real. The challenges are also real. Closing the gap will require continued collaboration between policymakers, financial institutions and the businesses driving the UK economy forward.

Chris Falby

With over two decades dedicated to helping businesses in the South East thrive, Chris, Sales and Marketing Director, brings a wealth of knowledge in securing financial assistance for SMEs. His career began in mainstream banking, where he gained valuable experience managing advances. This foundation, coupled with his extensive network and expertise in independent funding, allows Chris to provide tailored invoice finance solutions that meet the unique needs of each client.