Top 5 Business Loan Schemes for Women Entrepreneurs
Nowadays women in the entrepreneurship sector are bringing massive growth.. With a mission to empower women entrepreneurs, the Government has introduced many business loan schemes to help them in the best way. Most of these loans have no collaterals, lower interest rates, or longer tenures, making it easier for women to apply for a loan.
Continue reading to know more about it in detail!
What Are the Challenges Faced By Women Entrepreneurs in India?
The various challenges faced by women entrepreneurs in India are as follows:
- Lack of Education
Illiteracy or limited access to education, especially from childhood by their family, is a major hurdle for women which prevents them from starting their own businesses. Proper education leads to better management of the business and hence, every woman should get educated.
- Financial Inaccessibility
Capital is the most important requirement to start a business. Due to the lack of collateral, which is usually required to secure loans, there is a very low probability of getting a business loan.
- Security and Safety Considerations
Starting or running a business requires a lot of hard work, especially in its initial years. For this, a woman has to work for extra-long hours and frequently meet clients and customers and reach home late. This brings the question of security and safety for women. Although the Government is taking steps to increase the safety of women in India, its progress is rather slow in comparison to the crime rate.
- No Family Support
Women in many village areas are forced to marry at a young age, which entails taking on family responsibilities. Speaking about starting a business here can be very difficult. As a result, with no family support and enormous responsibilities, it becomes difficult for women to start a business.
- Limited Network Access
Networking is another essential requirement for launching a successful business and allowing it to grow. However, women entrepreneurs need to put a lot of effort into developing a professional network. They can form these relationships with other businesspeople in the same field in order to gain experience.
What Are the Top 5 Business Loan Schemes for Women Entrepreneurs?
The 5 main business loan schemes for women entrepreneurs are as follows:
- Cent Kalyani Scheme
It is a business loan offering scheme by the Central Bank of India to support women entrepreneurs, especially to fund start-ups or expand any ongoing business. The main objective of this loan scheme is to provide collateral-free loans to women with zero processing fees.
Women in the farming industry, retailing firms and MSMEs are eligible to avail this loan. Here, the maximum loan limit is ₹100 lakh for a maximum period of 7 years, but the interest rate depends on the market.
- Bhartiya Mahila Bank Business Loan Scheme
This business loan scheme was implemented by the Bharatiya Mahila Bank (BMB), offering loans to women entrepreneurs of up to ₹20 crore. It mainly focuses on the working capital requirements and business expansion of manufacturing enterprises. Moreover, there are three different plans under this women’s loan scheme which include:
- Shringaar: The Shringaar loan scheme provides loans without any collateral to women entrepreneurs who are planning to open a business or to meet the daily expenses of any ongoing business.
- Annapurna: The Annapurna loan scheme is another loan policy without any collateral providing loans to women entrepreneurs in the food business, between 18 and 60 years old.
- Parvarish: The Parvarish loan scheme is provided to set up day-care centres for babies or young children by women homemakers or self-employed women. Here, under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGSTSM) scheme, you can get a maximum loan of ₹1 crore without any collateral.
- Mahila Udyam Nidhi Yojana
This business loan scheme is offered by the Small Industries Development Bank of India (SIDBI) and Punjab National Bank (PNB). The main aim of this scheme is to support women entrepreneurs to set up small-scale ventures or MSMEs. It provides a loan of up to ₹10 lakh to be repaid in 10 years at an interest rate depending on the market rate.
- Stree Shakti Yojana
This business loan package is a unique Government scheme for women entrepreneurs by supporting them financially with certain concessions. This loan is only available to women having the majority of ownership in their business, which should be more than 50% of the total equity. Additionally, these women have to be enrolled under their respective state agencies’ Entrepreneurship Development Programme (EDP).
- Pradhan Mantri Rozgar Yojana
The main objective of the Pradhan Mantri Rozgar Yojana is to provide financial assistance to self-employed women. It supports various sectors, starting from agriculture to new ventures. From this loan scheme, women can avail of a 15% subsidy on project costs, with a maximum of ₹12,500 per head. For North-eastern regions, Himachal Pradesh, Uttarakhand, Jammu & Kashmir, the maximum subsidiary extends to ₹15,000.
Moreover, women can get a minimum of ₹2 lakh loan for business sectors and ₹5 lakh minimum for service or industrial purposes. However, for getting any of the services under this scheme, your age must be between 18 years and 35 years.
Now that you are aware of the top business loan schemes introduced to provide financial support to women entrepreneurs, you can start your business journey easily. With above-mentioned loan schemes, many problems and restrictions faced by women entrepreneurs are getting solved. Moreover, you can choose to opt for a specific loan scheme as per your requirement.
Frequently Asked Questions
Are there any tax benefits for women in case of availing of a business loan?
Yes, there are tax benefits available for women on the interest payment of the business loan amount. This has been stated under the Income Tax Act, 1961. However, no tax benefits are available on the principal amount of the business loan.
What are the basic documents required to apply for a business loan in India?
The basic documents required to apply for a business loan in India are mainly for identification, address, finances and other proofs. Here, the main documents are a PAN card, voter’s card, copy of income tax returns, balance sheet, P/L statements, etc.
Are there any additional benefits of taking a joint business loan with a woman?
Yes, there are many benefits of taking a joint business loan with a woman. Here, the woman can be your spouse, daughter, business partner or of any other relationship. Applying for a joint loan can provide you with benefits like tax deductions, higher loan amounts, better interest rates, etc.
Which is the eligible age to apply for small business loans for women entrepreneurs in India?
In general cases, the minimum age limit to apply for a business loan is 20 years, whereas the maximum age is 60 years. However, these age limits might vary in certain loan schemes.