How can a Woman Owner Obtain a Business Loan in India?

In recent years, more and more women entrepreneurs have entered into the business sector. As of now, 13.76% of entrepreneurs in India are women. Additionally, women own as much as 10% of formal enterprises.

To encourage women business owners to launch, expand and run their businesses, the Indian Government has introduced various loan schemes with attractive loan terms. This has given rise to business loans for women. 

Read on to find more details on business loans available for women and how you can obtain one.

Steps to Obtain a Business Loan

Women business owners can obtain financing for their enterprises by following a few simple steps, such as:

Step 1: Conduct extensive research on different loan offers by banks and financial institutions and check if you are meeting the eligibility criteria.

Step 2: Visit the website of your preferred lender

Step 3: Click on Apply Now

Step 4: Review the list of documents needed to obtain the loan

Step 5: Fill in the application form with all the needed details

Following this, a representative of the lender will get in touch with you regarding further steps. Note that you must keep all documents handy beforehand for a hassle-free application process. There are various options for availing of business loans for women. You can opt for traditional bank loans, NBFC loans, micro-financing, or loans from various fintech platforms. Women entrepreneurs looking for loans from fintech platforms can opt for Lendingkart business loans with zero collateral, simplified processing, and fast disbursal.

Loan Schemes for Women Business Owners

Here is a compiled list of tailored business loans for women that you can consider applying for:

Pradhan Mantri Mudra Yojana

The government launched Mudra loan schemes to provide financial assistance to individuals running medium, small, and micro enterprises. You can obtain this loan without pledging any asset as security. The different schemes available under the Mudra loan are:

• Shishu Loan: You can obtain this if your business is in its starting stage. The maximum loan amount you can obtain is Rs. 50,000.
• Kishor Loan: This loan is for established businesses wishing to improve their services and expand. The loan amount ranges from Rs.50,000 to Rs.5 Lakh.
• Tarun Loan: This loan is intended for well-established businesses that want to expand their reach. The maximum that you can borrow will be Rs. 10 Lakhs.

Annapurna Yojana

The Annapurna Yojana is one of several government loan schemes curated for women entrepreneurs. The Government of India offers individuals operating food catering businesses loans of up to Rs. 50,000. The borrowed funds could be used to meet working capital requirements such as purchasing utensils, a mixer and grinder, a hot case, tiffin boxes, a working table, and more.

You do not have to pay the EMI for the first month after the loan is approved. Once approved, the loan must be repaid in 36 monthly installments. The interest rate charged is determined by the market rate and the lender.

Stree Shakti Yojana

The Stree Shakti Yojana is a government scheme for women that encourages entrepreneurship by offering tax breaks. This women-centered loan scheme is only available to women who own the majority of a company.

Another requirement to fulfill eligibility under this scheme is that female entrepreneurs need to participate in the Entrepreneurship Development Programme (EDP) run by their respective state agencies. This Stree Shakti scheme can provide you with a 0.05% interest concession on loans more than Rs. 2 Lakhs.

Dena Shakti Scheme

The Dena Shakti Scheme offers loans of up to Rs. 20 Lakhs to women entrepreneurs in agriculture, manufacturing, microcredit, retail stores, and small businesses. This government scheme for women also includes a 0.25% interest rate reduction. Furthermore, under the micro-credit category, women entrepreneurs can obtain a loan of up to Rs. 50,000.

Bhartiya Mahila Bank Business Loan

The Bhartiya Mahila Bank (BMB) is a public sector banking company that provides loans to women entrepreneurs of up to Rs. 20 Crores for working capital, business expansion or manufacturing requirements. The different plans available under this woman’s loan scheme are:

• Shringaar: The Shringaar loan from BMB is for self-employed women or homemakers who are starting a business or need money to run day-to-day expenses. You are not required to provide any collateral for this loan.
• Parvarish Loan: This is designed for self-employed women or homemakers who want to open daycare centers. The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGSTSM) scheme allows for a maximum loan amount of Rs. 1 Crore with no collateral.
• Annapurna: Food entrepreneurs aged 18 to 60 wanting to start or expand their small businesses can apply for this loan. You do not need to pledge your asset as collateral to obtain this loan.

Mahila Udyam Nidhi Yojana

The Mahila Udyam Nidhi Scheme, one of the most popular government business loans for women entrepreneurs, is offered by the Punjab National Bank and the Small Industries Development Bank of India (SIDBI). The scheme helps women entrepreneurs establish a new small-scale business by providing loans of up to Rs. 10 Lakhs with a repayment tenure of 10 years. 

With the availability of so many business loans for women, obtaining financing for women’s entrepreneurship has become simpler and hassle-free. Consider knowing the eligibility parameters of such schemes before proceeding. This will help you make informed borrowing decisions.