These days, more and more women are venturing into the world of entrepreneurship to experience the unique heights of financial freedom. And to enable their journey towards independence, business loans for women act as an ideal aid. To start any business, first of all money is required. In such a situation, we look towards the bank and think about taking a business loan from the bank. Business loans for women become even more useful when women want to start a business of their own.
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Business loans for women are specially designed to meet the business needs of women entrepreneurs. In this article, we will tell you about the top 5 business loan schemes for women entrepreneurs available at low interest rates. Read this post carefully to know how to get business loans for women.
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Business Loan For Women: 5 Business Loan Schemes
1. Central Bank of India - Cent Kalyani
The Central Bank of India offers business and startup loans to women who want to start a new business or want to expand or replace an existing business. Women entrepreneurs working in rural and cottage industries, MSMEs and farming, retailing and government-backed firms can avail these business loans.
- Interest rate: 7.70% – 7.95% per annum
- Loan Amount: Rs.1 Crore. until
- Processing Fee: Nil
- Purpose: To meet the day-to-day expenses of the business, to purchase plant and machinery/equipment etc.
- Loan Types: Term Loan, Working Capital Facility, Overdraft, Letter of Credit / Letter of Guarantee, etc.
- CGTMSE Coverage: Available
- Collateral/ Security or Third Party Guarantee: Not required, as covered under Guarantee Cover of CGTMSE
- Insurance: Insurance of stock, machinery/equipment etc. with bank clause
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2. Mudra Loan
The Mudra loan scheme was launched in 2015 under the Pradhan Mantri Mudra Yojana (PMMY). The scheme provides loans to individuals, startups, business owners as well as women entrepreneurs. Business loan amount up to Rs. 10 lakh is available to women living in both urban and rural areas for doing business.
Mudra loans are provided to women to encourage women entrepreneurs and to promote the Micro, Small and Medium Enterprises (MSME) sector.
There are three loan categories in this scheme;
Shishu – Loans up to Rs. 500,000 to start a business.
Kishor – Loans up to Rs.5,00,000 to start a business.
Tarun – Loans up to Rs.10,00,000 to start a business.
Below are the basic features offered by the banks and NBFCs under the Mudra Scheme:
- Concession on interest rates for women entrepreneurs
- Loan Amount: No minimum limit and maximum of Rs.10 lakh.
- Processing Fee: Up to 0.50% of the sanctioned loan amount
- Repayment Period: Up to 5 years
- Collateral-free loan: No security deposit required
- Loan Type: Term Loan / Overdraft
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3. Shringaar and Annapurna Loan Scheme from Bharatiya Mahila Bank
Bharatiya Mahila Bank offers a variety of business loans to women entrepreneurs to help them set up a new business or expand their existing business. Shringaar and Annapurna schemes are also included in this category. Shringaar loan is provided to women who want to open their own beauty parlour. On the other hand, Annapurna Loan Scheme provides financial assistance to those women who want to open a food catering business.
a.) BMB Shringaar – Loan for Beauty Parlour, Salon or Spa
Age of applicant: Minimum 20 years and maximum 60 years
Repayment Period: Maximum 7 Years
Collateral-free loan covered under CGTMSE scheme
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b.) BMB Annapurna Loan – Food Catering
Age of applicant: Minimum 18 years and maximum 60 years
Repayment term: Up to 3 years
Collateral-free loan covered under CGTMSE scheme
Sind Mahila Shakti from Canara Bank
Syndicate Bank’s Syndicate Mahila Shakti, now merged with Canara Bank, provides business loans to both new and existing women entrepreneurs. The scheme is available either as a cash credit or as a term loan scheme of up to 10 years to meet the working capital requirements of new and existing business units. If your business also needs this type of loan, it should have at least 50% stake from one or more women.
Shakti Yojana from Bank of Baroda (BOB)
Dena Bank’s Shakti scheme supports women entrepreneurs in multiple sectors including agriculture and allied activities, retail business, micro credit, education, housing as well as direct/indirect finance, manufacturing and service sectors. The maximum loan interest rate, amount and repayment tenure varies depending on the sector of your business. There is no processing fee charged on the loan and 0.50% interest subvention is given on loans up to Rs 5 lakh.
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Features of Small Business Loan for Women
Interest rate: Women customers are given a discount in the interest rate which may vary from bank to bank
Loan Type: Term Loan, Unsecured Loan, Working Capital Loan, Overdraft
Loan Amount: No minimum limit, maximum loan amount is up to 5 crores, this amount can also be increased
Repayment term: 12 months – 5 years
Collateral / Security or Third Party Guarantee: Not required
Eligibility For Business Loans For Women
- Age: Minimum 18 years and maximum 65 years
- All applicants who have paid off their previous loans and have not defaulted
- Individuals, MSMEs, Sole Proprietorships, Partnership Firms, Limited Liability Partnerships (LLPs), engaged in trading, manufacturing and service sectors are eligible for this loan
- Annual Turnover: To be prepared by the bank/loan institution
Documents Required For Small Business Loan For Women
- Application form with 2 passport size photographs of the applicant
- Identity Proof: Driving License, Voter ID Card, PAN Card, Passport, Aadhaar Card, etc.
- Address Proof: Passport, Utility Bill, Aadhaar Card, Voter ID Card
- Income Proof: Salary Slip, Bank Statement
- Business Incorporation Certificate
- Any other document required by the Bank / Lending Institution.
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Chit Fund: To Help Business Owners And Start-Ups
Chit funds are a great way for business owners and start-ups to get the funds they need to grow their businesses. Chit Fund is a suitable option for both short and long term funding.
- Investing in chit funds gives financial support to your business. Unlike other financial institutions, a chit fund is more helpful and understands the need for liquid cash with minimal paperwork and documentation. Chit fund is like your friend who is always there to help you.
- Not only during crises, but chit funds can give opportunity to small businesses and startups to save enough money so that they can expand their business. A business owner can invest in chit funds and then get a lump sum amount after maturity, which can be used for business.
- If you want to achieve your medium term objectives which can be achieved in two to five years, you can put a part of your current profits in a chit fund scheme. A lump sum payment will be available to you when you need the money over two years. If the tenure of the scheme is longer, then you can reinvest the money for longer tenure. Your investment will provide a good return of 10% -15% p.a. if you keep the money and do not withdraw it by the end of the term.
- There is also a dual option of investing in chit funds and borrowing. You invest your money over a period of time and during the period of the chit, in case of emergency, you can bid and withdraw much more than you have invested. And then you can continue paying your monthly installments. This makes repayment easy and hassle free.
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