Over the last 3 decades the number of female bosses has steadily grown and today 1/3 of the world’s entrepreneurs are female. While this is an amazing feat we still have a long way to go in achieving complete equality. So to make this happen lots of banks and Fintech companies are now offering women entrepreneurs business loans catered especially towards their enterprise.
Business loans are loans given to businesses for meeting their working capital and infrastructural requirements, for expansion and upgrade, and for achieving overall growth and stability. But nowadays since many entrepreneurs are running their own small start-up, raising funds for such a business becomes very difficult especially if they go through the traditional means. There are abundant alternate options through which small businesses can access funds.
To encourage more and more women entrepreneurs in India the government and many financial institutions have introduced schemes that lend capital to female entrepreneurs. These schemes are exclusively catered towards lady bosses and they have relaxed terms and conditions and suitable interest rates. Additionally, few institutions also have cells within their branch to counsel and train women entrepreneurs to promote their business.
While many banks and organizations are now offering loans to women for their businesses or to start new businesses, the top 5 schemes popular for offering loans to women entrepreneurs in India are –
Offered by the Central Bank of India, under this scheme women can avail a loan to start a new venture. Even those who have an established business, are experienced as a business owner, are self-employed or are professionals can opt for loans under this scheme. Furthermore, this loan scheme is applicable to those engaged in agricultural and allied activities in village and cottage industries.
1. Eligibility criteria for this scheme – Women over 18 years of age with no income ceiling for assistance can opt for this loan
2. Maximum loan amount – Women can apply for loans up to Rs.100 lakhs
3. Loan term – Loans ranging from 1 year to 7 years are offered under this scheme
4. Interest rates & processing fees – This might change based on bank’s business requirements. But the estimated interest rate is base rate+0.25% for loans up to Rs.10 lakhs and for loans over Rs. 10 Lakhs the estimated interest rate is base rate+0.50% (+ applicable tenure premium). The processing fee for this loan scheme is fully waived.
5. Other features – No collateral/third party guarantee required and hypothecation of all stocks and assets created from bank’s fund is required as security
This scheme is offered by the State Bank of India to women who own businesses. It also has an offer of collateral free loans up to Rs. 5 lakhs and charges a lower interest rate than banks.
1. Eligibility criteria for this scheme – Women need to own at least 51% or more of the business
2. Maximum loan amount – Under this scheme the maximum loan amount one can avail is up to Rs.50 lakhs
3. Loan term – The tenure changes depending on the loan amount and other factors
4. Interest rates & processing fees – The interest rate is 0.50% below the base rate if loan amount exceeds Rs.2 Lakhs, otherwise as per the base rate of the bank. Processing fees vary depending on the loan amount
5. Other features – No security required for loans of up to Rs.5 lakhs in the tiny sector and no interest concession for loans provided to retail traders
These are 2 popular types of loans offered by the Bhartiya Mahila Bank to women entrepreneurs for helping them set up new or expand existing businesses in the food catering segment or even for selling lunch packs.
1. Eligibility criteria for this scheme – The women applying for the loan must be between 20 to 60 years of age
2. Maximum loan amount – For the Shringaar loan scheme the maximum loan amount is up to Rs 10 Lakhs and for the Annapurna scheme it is up to Rs.50,000
3. Loan term – The loan tenure is 7 years for the Shringaar scheme and 3 years for the Annapurna scheme
4. Interest rates & processing fees – For the Shringaar scheme the interest rate is base rate+ 2% and for Annapurna scheme interest rate is base rate + 1.5%. For both schemes the processing fee varies based on factors such as loan amount
5. Other features – Shringaar scheme partners with Naturals, Cavin Kare and Lakme Ltd and both these schemes are collateral free and covered under the CGTMSE.
This loan is offered by Syndicate Bank for both new and existing women entrepreneurs. Under this scheme you can get cash credit to meet your working capital requirements or get term loan of up to 10 years.
1. Eligibility criteria for this scheme – At least 50% of the business needs to be owned by 1 or more women and they must have adequate knowledge /experience of the business activity
2. Maximum loan amount – One can avail up to Rs.5 crore under this scheme
3. Loan term – The maximum loan tenure is 10 years
4. Interest Rates and processing fees – The interest rate is 0.25% below base rate for loans over Rs 10 Lakhs and for smaller loans the interest rate is at the base rate. Processing fees is fully waived off.
5. Other features – You can get a free credit card and no third party guarantee required for loans under purview of CGMSE.
This loan is offered by Dena Bank and supports women entrepreneurs involved in either agriculture & allied activities, retail trade, micro credit, education, housing or in businesses dealing with direct/indirect finance, and manufacturing and service sectors.
1. Eligibility criteria for this scheme – The woman entrepreneur must own more than 50% of the business
2. Maximum loan amount – The loans offered are up to Rs.20 Lakhs for retail trade, education and housing and up to Rs.50,000 under micro credit schemes
3. Loan term – The loan tenure varies based on the loan amount and other factors
4. Interest Rates and processing fees – The interest rate is 0.25% below base rates for women applicants who are majority stake holders in the company and the processing fee varies based on loan amount and other factors
5. Other features – Micro credit and retail stores are also eligible along with enterprises operating in the agriculture and allied sector
What’s base rate?
The minimum rate set by the Reserve Bank of India below which banks cannot lend to its customers.
The Credit Guarantee Fund Trust for Micro and Small Enterprises is a special protection scheme under the Government of India,
That was all about small business loans for women, stay tuned for FlexiLoans products catered towards women. Until then any women entrepreneur can apply to our business loans by clicking here.