In the bustling morning markets of rural India, imagine a scenario with two small business owners, Rekha and Jaya. Rekha’s stall has a steady flow of regular customers who appreciate the quality of her products. A few stalls down, Jaya struggles to sell wilting produce, with her customer base dwindling and debt mounting. Both women took out similar loans from the same financial institution around the same time, driven by their dreams of financial independence and supporting their families. Both faced the same market conditions and challenges. However, they achieved substantially different results. Rekha is planning to expand while Jaya contemplates closing her business.
Around the world, women entrepreneurs are reshaping economies, from rural market stalls operated by women like Rekha and Jaya to tech startups. Yet, many still face barriers stifling their potential. Empowering women through finance does more than unlock individual opportunity; it broadens the tax base and fuels investments in public goods like education and infrastructure. But behind the promising gains lie five persistent challenges that demand targeted action: limited access to equity, inconsistent training, data gaps, restrictive social norms, and financial systems that exclude women by design.
In October 2024, the World Bank Group launched its Gender Strategy for 2024-2030 and set ambitious goals to boost economic opportunities for women, including facilitating capital for 80 million more women and women-led businesses. But to reach this goal, we need to better understand who receives capital, under what conditions women entrepreneurs receive funds, and how financial institutions can better support them.
Financial literacy: The foundation that makes capital work
Many women entrepreneurs do not apply for loans because of low financial literacy (Morsy 2020). To help address this, the World Bank leverages digital cash transfers, linking them with skills training and coaching to equip women with the tools for sustained economic opportunities beyond temporary financial support.
According to new evidence, women who participate in financial literacy programs are more likely to save, repay loans on time, and hold insurance. The most effective programs share three key characteristics: they provide a community-based and customer-centric experience, they bring in current and former women entrepreneurs to provide real-life examples and inspire potential entrepreneurs, and they allow a friend to join the entrepreneurs during the training, which helps improve confidence and outcomes.
The power of support systems: Family and community as business assets
Behind many successful women entrepreneurs is a strong support system. Research shows that family support (particularly from their spouse) and social capital (for example, being a member of an organization) are linked to better financial outcomes. This link highlights a critical insight: women’s entrepreneurship does not happen in isolation; rather, the aspirations, opportunities, and outcomes of entrepreneurs like Rekha and Jaya are fundamentally shaped by their environments.
Flexible finance: How lenders can enable success
Financial institutions can also help improve outcomes by designing loan products that reflect the realities of small businesses and their cash flows, particularly for women operating in uncertain markets. One example from India during the COVID-19 pandemic showed that when entrepreneurs who operated food stalls had access to flexible repayment options, such as overdraft facilities and digital payment systems, they had markedly better repayment rates than those with standard loans (Desai, Sensarma & Thomas 2025).
When external shocks disrupt normal business patterns, flexibility allows business owners to better adapt and remain resilient. This extends beyond crisis management. Evidence shows that offering a choice of contracts, options to delay payments, and alternative credit lines improves business outcomes without increasing default rates. For entrepreneurs operating in volatile markets with seasonal cash flows, this flexibility is crucial for weathering shocks and sustaining growth. In addition to enabling success for borrowers, more accessible digital financing can also help lenders reach more women entrepreneurs and at lower costs.
Many of these conclusions are also echoed in the Women Entrepreneurs Finance Initiative’s (We-Fi) recent evidence paper on “Supporting Women Entrepreneurs in Developing Countries: What Works?”.
