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Loan for Women: Business Loan Schemes for Women Entrepreneurs

 

The vibrant start-up ecosystem of India offers countless opportunities with high growth potential, attracting investors from across the globe. Leveraging the same, women are now stepping out of their household boundaries and ditching high-paying jobs to explore the realm of entrepreneurship with an aspiration to make their venture a success.

One of the key reasons that drive a large number of women towards setting up their businesses is the availability of business loans. From banks to NBFC (Non-Banking Financial Service), and other financial institutions, there are numerous ways women can apply for a business loan to fund their dreams and become contributing members of society. Doing this not only fulfills their entrepreneurial dreams but also caters to the dreams of many others with similar interests.

No matter if it is a small home-based venture or a full-fledged business with a nationwide presence, there is a loan scheme for every women entrepreneur, all they need to do is explore to be able to find the best option that fits the bill.

Loan Scheme for Women

1. Small Business Finance

Many financial institutions offer small business loans to women. While most of these schemes are available for existing small businesses, many lenders also facilitate borrowers with their new business loans. One of the popular options here is the LOC - Line of Credit where the borrower’s eligibility determines the creditworthiness. Based on this, the lenders decide the credit limit for the borrower. In such cases, the borrower has to pay the interest on the amount she utilizes and not the entire credit limit.

Features

  • Affordable interest rate

  • Ideal for short term funding

  • Available for existing and new business

2. Commercial Business Finance

Commercial business loans for women entrepreneurs are generally ideal when they are looking forward to expanding their existing medium scale business in terms of services, operation, location, etc. Such types of loan schemes provide instant online application and approval facility, however, subject to the applicant’s eligibility and repayment capacity. Some lenders also provide a prepayment facility that allows borrowers to repay the loan before the end of the tenure.

Features

  • Easy application and approval

  • Loans up to Rs 50 lakhs and more

  • Repayment tenure of 3-5 years (vary for different lenders)

3. Loan Against Security

One of the easiest ways to get small business loans for women entrepreneurs is to consider pledging security in the form of land, house, mutual funds, shares etc. Under this type of scheme, lenders generally offer loans of up to 60% to 75% of the market value of the pledged asset. As the borrower is providing security against the loan, the eligibility to apply for the same is relaxed to a certain extent. However, she will have to provide adequate ownership proof of the pledged asset. The security is released post repayment of the entire loan amount.

Features

  • Secured type of loan

  • Affordable interest rate

  • Minimum eligibility requirements

  • Quick application and approval

  • Flexible repayment options

4. Gold Loan

Gold loan is one of the quickest and effective ways for a woman to finance her venture. Further, financial institutions like Muthoot Finance make the process smooth and hassle-free with their Mahila loan schemes. One can easily pledge her gold in any form and fulfill the financial needs to kickstart the venture. And worry not, as your gold is completely safe.

Features

  • Secured type of loan

  • Easy and convenient

  • Quick disbursement

  • Minimal documentation

  • Complete safety and satisfaction

5. Personal Loan

Seeking a personal loan is another great option for women entrepreneurs for small business or home-based ventures. In such types of loan schemes, borrowers do not have to pledge a security against the loan amount. However, this makes the eligibility criteria slightly stringent in terms of the borrower’s creditworthiness, including monthly income, credit score, etc. Borrowers with professional experience, those accepted by the lender, have an advantage when seeking a personal loan as compared to homemakers. But, there is an option for non-professionals to increase their chances by adding their husband, father, brother or any other earning member of the family as a co-borrower.

Features

  • Easy online application

  • Quick approval

  • Freedom to utilize the loan amount

  • Loans of up to Rs 50 lakhs for up to 5 years (vary for different lenders)

6. Government Schemes

There are various government loan schemes to encourage and empower the women of society. They can choose from multiple options under the Mahila loan schemes, exclusively launched for women entrepreneurs. To name a few, Pradhan Mantri Mudra Yojna and Rashtriya Mahila Kosh are some of the schemes for women to reap benefits from while fulfilling their dreams. One of the plus points for such schemes is that they offer the lowest interest rates with minimal eligibility requirements.

Features

  • Variety of schemes to choose from

  • Many banks and financial institutions are a part of the schemes

Loan for Women: Eligibility and Documentation

Most banks and financial institutions have simple and transparent terms of the loan application. These include,

  • Must be a residing citizen of India aged 25 to 65 years

  • Must have filed ITR for the existing business for at least 1 year (if any)

  • Must have a good CIBIL score, 750 or higher

Here is the list of documents required for women seeking a business loan.

  • Identity proof: KYC documents like Aadhar card, PAN card, driving license, passport or any other documents issued by the government.

  • Address proof: Apart from KYC, you can submit documents like a rent/lease agreement, ration card, utility bills as address proof.

  • Financial documents: Bank account statement for the last six months is to be submitted along with a copy of ITR for at least one year. Also, include a balance sheet and profit/loss statement in case of an existing business.

  • Ownership proof: Documents required to prove the ownership of a business or pledged securities. These include a business registration document, partnership deed, the certificate of commencement/article and memorandum of association.

Business loans serve as the perfect enabler to empower your aspirations; make it work to achieve what you’ve set out to do.

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