The lending gap: Breaking down the barriers to business financing for women in Australia

“That reflects what I see daily,” says Sonja Pfitz, Director of Pfitz Business Finance Solutions.

“Women own a large share of Australian small businesses, but lending allocation doesn’t reflect that. The biggest barriers female founders face aren’t about capability or business performance – they’re systemic bias.”

From outdated perceptions and rigid risk models to a lack of access to financial networks, female founders face unique challenges when seeking funding, says Sonja. And it’s not just women who are losing out – it’s our economy. The OECD estimates that leveraging women entrepreneurs could boost global GDP by up to 2%.

But there are signs things are starting to change. With alternative lenders offering flexible, fairer solutions, there’s a growing opportunity to close the gender finance gap – and unlock billions in untapped economic growth.

One of the most persistent challenges female founders face isn’t the numbers – it’s in the narrative. Entrenched biases still shape how women-led businesses are perceived by traditional lenders.

“Too often, they’re viewed as riskier, or just ‘hobby’ businesses or side hustles even when they’re stable and profitable,” says Sonja. A common assumption is that women operate in only a few “soft” sectors – and that those industries are lower-growth by default.

“There’s still a perception that female-led businesses sit predominantly in retail, beauty, or lifestyle sectors,” she says. “The reality is very different – many of my clients are in manufacturing, wholesale, logistics, and even engineering.”

Those misconceptions have real consequences. “When lenders underestimate the scale and complexity of these businesses, they may apply lower lending limits, assume lower growth potential, or even suggest inappropriate products,” says Sonja. “These misconceptions limit women’s ability to compete in industries where they’re already proving themselves.”

This bias is even more pronounced when women create products targeted at female consumers. “Products designed for women are often dismissed as ‘niche,’ even though women drive the majority of household purchasing decisions and represent massive markets,” says Sonja.

“In practice, I’ve seen strong, scalable businesses overlooked simply because decision-makers don’t relate to the customer problem being solved. This highlights the need for more diversity in credit teams and investment committees – bias is often unintentional but still deeply damaging.”

Beyond perception, the traditional lending system itself often works against female founders – particularly in how it defines risk and determines creditworthiness. Many of the roadblocks, says Sonja, aren’t about business strength, but about frameworks that haven’t evolved to reflect the way SMEs operate today.

Property remains a central issue. Under most current risk models, it’s still considered the ultimate form of security. For those who don’t own significant assets or aren’t in a position to take that personal risk, this is a major barrier.

“Many women cannot provide property as collateral in the way lenders expect, yet property remains the default benchmark in most bank risk frameworks. This disadvantages viable, growth-ready businesses that don’t fit a property-backed model,” says Sonja. “Lenders must value business financial stability; business strength and sustainability – not just bricks and mortar.”

Another common barrier? That a lean payroll or modest owner salary signals risk. But as Sonja explains, that often reflects smart financial management.

“Many credit models overweight historic tax returns and averaged NPAT, while underweighting current trading momentum and forward visibility (e.g. confirmed contracts, order books, debtor performance),” she says. “For growing businesses, that backward-looking bias can understate true serviceability.”

While the challenge is significant, there are signs of progress. “There is more conversation and acknowledgement, and some lenders have introduced targets for women-led business lending,” says Sonja. “But from a practical perspective, the gap remains wide.”

Without clear pathways or confidence in approval, many women still rely on personal savings, credit cards, or informal borrowing. But fintechs and non-bank lenders are stepping in to help close the gap in business financing for women-owned businesses.

“Fintechs and non-bank lenders like Octet are rewriting the rules by using real-time data, cash flow analytics, and non-traditional metrics. This helps level the playing field for women whose businesses may not tick every box on a traditional scorecard.”

The speed and flexibility of non-bank lenders is a critical advantage for growing businesses. “They tend to move faster, which is vital when an opportunity or cash flow pressure arises. But we need broader awareness among female founders that these pathways exist.”

For many, the missing piece is having the right advocate. “Women often have less access to the traditional finance networks that help deals get shaped and championed,” says Sonja.

“My role is to bridge that gap – understanding their business, matching them with the right lender, and advocating for them through the process. Having someone in your corner changes the outcome dramatically.”

“Female founders aren’t asking for special treatment – just fair treatment,” says Sonja. Lenders must move beyond outdated criteria and perceptions to assess serviceability based on real business momentum, she says.

Alternative lenders like Octet are helping to bridge this gap, but awareness of these funding pathways for women-owned businesses is still limited – which is why brokers and advocates matter. They help reframe the story, connect founders with the right solutions, and change outcomes.

“Systemic bias in finance isn’t just a women’s issue – it’s an economic issue,” says Sonja. “By overlooking female founders, institutions are leaving untapped growth on the table.”

At Octet, we work with commercial finance brokers and business owners alike to offer flexible, fast, and fair funding working capital solutions to power your business. Get in touch with our team today to learn more.