Small business loan for women: Here’s your best option

The Indian economic platform is witness-ing a major change as more and more individuals ditch their high-income jobs to assume entrepreneurial roles. The startup market resplendent with a variety of ideas and options, not just offers a very lucrative income opportunity but also a space to display one’s creative abilities and business acumen.

It is heartening to see the significant rise in the number of women donning the role of entrepreneurs, with small businesses flourishing and aiming towards bringing about a positive change in society.

Small businesses like home based food catering ,beauty parlours etc. are providing a means for women to slowly carve their way into the mainstream market , and to assist them in their several entrepreneurial initiatives is the easy availability of several Business Loans from financial institutions as well as the Government.

Some of the different types of business loans that are available are:

1. Small Business Loans: These loans are mostly available for existing businesses, though some lenders offer Small Business Loans or SME for start-ups as well. One such Loan is the Line of Credit or LOC, which mostly caters to small to medium sized businesses, for female entrepreneurs.

   Eligibility: a credible credit score is very important which is used by the lender to establish the final eligibility of the applicant for the loan. Personal and business-related documents are also required.

   Benefits:

• Affordable interest rate

• Secured and unsecured funding available

• Ideal for short term funding requirements

2. Commercial Business Loan: ideal for a medium scale business. This loan can allow an amount as much as Rs. 50 lakhs to be borrowed for a tenure of up to 3-5 years. It does not require a detailed paperwork unlike SME, thereby functioning as an instant loan for an established business.

   Eligibility: Mostly offered to businesses that are at least a year old and profit making in nature, and to corroborate that, the applicant has to submit the current account statement of at least one year to the lender.

   Benefits:

• Can avail a loan of up to Rs. 50 lakh or more

• Online application and pre-payment facility available

• Repayment tenure of 3-5 years

• Minimum documentation

3. Loan Against Securities: helpful in starting a small or a home-based business. Loans can be procured against investments in the stock market, mutual funds and life insurance policies, and up to 60%-75% of its market value. These short- term loans are available for a period of 4-5 years.

   Eligibility: ownership proof of the securities, to be used as a collateral, is required. Documentation is detailed and unlike an online application will require a visit to the branch of the lending bank.

   Benefits:

• Secured loan with low interest rate and minimum eligibility.

• Flexible repayment option

4. Personal Loan: can be considered by women planning to start a home -based business. The loan is offered on the basis of the applicant’s financial ability hence it might be difficult for a homemaker, with no prior business experience, to apply for a big loan amount. However, to ease the process there is an option to add a co-applicant, like a spouse, which helps to increase the eligibility. It is an extremely flexible type of loan which can be used for both personal and professional requirements.

   Eligibility: monthly income and credit score is an important requirement to determine the loan amount that can be sanctioned.

   Benefits:

• Unsecured and flexible loan

• Amount of Rs. 50 lakh for 5 years can be availed

• Online application and approval available

• Option of including a co-application eases the process of loan procurement.

The government of India is also playing a very active role to ensure a spur in the growth of these small businesses managed by women entrepreneurs. One such common Business Loan for women in India is the Pradhan Mantri Mudra Yojana. It has three loan options – Shisha, Kishor, and Tarun, for both start-ups and existing businesses.

Shishu Loan Option offers a loan amount of Rs. 50,000, and is available for women entrepreneurs of small -scale businesses, while Kishor and Tarun allow an amount of up to Rs. 10 lakhs for a tenure of up to 5 years. The interest for these loans is the lowest, with minimal eligibility requirements, but the processing time is quite long.

Other similar schemes include:

• Women Enterprise Program or Mahila Udhyami Yojana

• Cent Kalyani from Central Bank of India

• Stree Shakti Package from State Bank of India

• Shringaar and Annapurna from Bhartiya Mahila Bank

• Shakti Scheme from Bank of Baroda

With this incredible financial support system in place, women are leaving no stones unturned to break through the stereotypical roles that they have been conditioned to play. It is certainly not easy to establish and maintain a business, but our women entrepreneurs are certainly doing a commendable job.

Click here to get started with your Business Loan application.

Read more on how to get a Business Loan here.

*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.