How access to credit helped women build businesses (and why it still matters)

Why access to credit matters for women entrepreneurs

Credit is a strategic and often essential tool for building and growing a business. Most small businesses rely on borrowed funds at some stage, whether it’s through business credit cards, lines of credit, or small business loans. Access to credit allows entrepreneurs to take actions like:

• Purchase inventory and equipment
• Invest in growth
• Smooth cash flow fluctuations
• Cover operating expenses and payroll
• Build business credit profiles

Without access to credit, starting or scaling a business becomes significantly more difficult. For women especially, access to independent credit is closely tied to long-term wealth building.

A study by the Institute for Women’s Policy Research (IWPR) found that women were less likely than men to obtain new funding from external investors. Business ownership is one of the most reliable ways to accumulate assets, yet entrepreneurs often need financing to get started.

But before 1974, many women couldn’t obtain that financing on their own.

Financial dependence and credit discrimination before 1974

Prior to federal protections, women routinely faced discrimination when applying for credit. Banks and lenders often refused to issue credit cards or loans to women unless a husband or male relative agreed to cosign. Even women with full-time jobs or established businesses were required to apply for credit in their husband’s name, and a credit card issued to a married woman would list the wife as Mrs. and then the husband’s name. It was especially difficult for single women and divorced women to obtain credit at all.

Some of the common barriers to obtaining credit for women included:

• Income discounted or ignored by lenders.
• Loan denials based on marital status or lack thereof.
• Lower credit limits than what men received.
• Mandatory male cosigners.
• Requirements to stop working if pregnant.

These barriers created widespread and systemic financial dependence for women, and meant that a woman’s ability to borrow often depended on her spouse’s credit history and financial decisions rather than her own. It also meant any credit history from using a card was being established in the husband’s name, and not the wife’s name.

For women business owners, the consequences were especially severe. Without access to loans or lines of credit, many women struggled to finance the expansion of their businesses. Some relied on personal savings or informal loans from family members instead of traditional financing. Others simply could not grow their business beyond small operations. Credit discrimination limited not only financial independence but economic opportunity.

A turning point: The Equal Credit Opportunity Act

The ECOA marked a major shift in financial equality when it was passed in 1974. The legislation was largely written by Emily Card, who was a legislative assistant to Senator William Brock of Tennessee in the 1970s. Card had her own issues gaining access to credit when she was working full-time. Her then-husband was a full-time student and approached Sen. Brock after seeing a December 1972 report from the National Commission on Consumer Finance that detailed the difficulties women were having getting access to credit.

Card, with Sen. Brock’s backing, was eventually able to gain enough Congressional support to pass the ECOA on Oct. 28, 1974 to prohibit discrimination based on sex and marital status. The ECOA was amended in 1976 to encompass prohibiting lenders from discriminating against applicants based on a wider range of criteria including:

• Sex
• Marital status
• Race
• Religion
• National origins
• Age
• Receipt of public assistance
• Consumer rights

Most importantly, the law allowed women to apply for credit in their own names without requiring a male cosigner. The ECOA also required lenders to provide explanations for credit denials, introducing a level of transparency that had not previously existed.

Why the ECOA passed

The law emerged during a period of rapid social change. Women’s participation in the workforce was increasing and more women were seeking financial independence. Despite this shift, lending practices remained rooted in outdated assumptions about marriage and gender roles. Women’s groups and policymakers alike argued that economic equality required access to financial tools like credit cards and loans.

The ECOA addressed these inequities directly by establishing a legal framework that continues to govern fair lending practices today.

How the ECOA changed borrowing for women business owners

The passage of the ECOA reshaped lending practices and unlocked new opportunities for women entrepreneurs. For the first time, women could:

• Qualify for business loans based on their own income.
• Build credit scores and histories independently of their spouses.
• Open credit cards in their own names.
• Apply for financing regardless of marital status.

This shift made it possible for women to build financial identities that followed them throughout their lives. Independent credit access allowed entrepreneurs to separate personal finances from business operations and pursue growth opportunities that would have previously been out of reach. Over time, lenders adapted their practices to comply with the law, and access to credit slowly expanded.

Rising entrepreneurship and women’s credit activity

As access to credit improved, entrepreneurship increased. Women-owned businesses grew steadily in the decades following the passage of the ECOA. As more women became business owners, independent credit activity also increased.

Credit cards became increasingly important tools for small business financing. For many, a credit card offered easier access to capital than many types of traditional loans. Having an independent credit history also made it easier for women to qualify for mortgages, car loans and business financing, which in turn supported broader wealth-building opportunities.

According to a 2025 U.S. Census Bureau news release, women own over 12.9 million businesses in the U.S., with over $423 billion in receipts. Access to credit played a crucial role in making that growth possible.

Why funding gaps persist

Despite the significant process since the passage of the ECOA, the playing field is still not equal for women entrepreneurs. Research consistently shows that women-owned businesses receive less funding than businesses owned by men. Several factors contribute to this age gap:

• Smaller loan amounts. Women business owners are often approved for smaller loans or lower credit limits, which can limit growth.
• Pay and wealth gaps. On average, women still earn less than men. A 2026 report by the American Association of University Women (AAUW) shows that women earn 81 cents for every dollar earned by a male counterpart. This inequity can make it harder to accumulate capital or qualify for larger loans. Lower household wealth can also affect borrowing capacity.
• Systemic bias. Some research suggests that implicit bias in lending decisions and credit scoring algorithms may influence approval rates and loan terms. A September 2025 report in the Journal of Behavioral and Experimental Finance found evidence suggesting that bias may be embedded in certain credit scoring models.
• Industry differences. Women entrepreneurs are more likely to operate in industries that traditionally receive less funding, like healthcare and education.

As a result of these issues, access to capital remains one of the most significant barriers facing women entrepreneurs today.

The future of business credit for women entrepreneurs

Modern lending is evolving rapidly, creating opportunities–and challenges– for female business owners. Modern credit scoring models, particularly those for personal credit scores, increasingly incorporate alternative data, such as utility payments and cash-flow history, which can help expand access to credit for those with limited traditional credit histories. Online lenders and financial technology companies (fintechs) have made borrowing both faster and more accessible. 

Many types of business financing require strong personal credit. Women who focus on building a separate business credit profile, rather than relying solely on personal credit may find it easier to qualify for larger financing in the future.

Despite the technological and educational advances, structural inequities remain. Women entrepreneurs overall still are unable to access capital at the same scale as male-owned businesses. Shrinking these gaps is likely to require both policy changes, consistent efforts to spotlight funding options, and ongoing innovation in lending practices to eliminate bias.

The bottom line   

Access to credit has been one of the most important drivers of financial independence and wealth-building for women in the U.S. Before 1974, many women could not obtain credit without a male cosigner, making it difficult to start or grow a business. The ECOA changed that by allowing women to establish credit in their own names and borrow independently. That shift helped open the door for increased female entrepreneurship and long-term wealth building.

More than half a century later, access to credit remains essential for women business owners, and ensuring equal access continues to be a key part of achieving financial equality.