Entrepreneurship ventures or startups are definitely not considered as new concepts in India. However, in an age where a range of benefits are offered to new businesses and women entrepreneurs are still a distinct minority. In order to spur further growth of entrepreneurial initiative among women, leading financial institutions in India, including nationalized, private, and public sector banks, have introduced various loan schemes that cater to this emerging segment.
Some of the key features of these loans include competitive interest rates, Nil to Zero processing fees, No Collateral or third-party guarantee necessary in most of the cases, and loan repayment tenure up to 10 years.
Let’s take a look at the 5 of the most popular small business loans for women entrepreneurs in India.
1. Cent Kalyani from Central Bank of India – MSME Loan Interest rate: 7.35% onwards
Central Bank of India offers business and startup loans for women entrepreneurs who are looking to open a new business or want to expand or alter the current one. Females who are into rural and cottage industries, MSMEs, entrepreneurs, and women working in farming, retailing, and government-backed firms can avail this loan. The purpose of the loan is to meet day-to-day requirements, such as the purchase of plant & machinery/equipment, etc., and working capital expenditure. There are no processing charges applicable on the loan amount. The upper limit of the loan amount that you can avail under this scheme is up to Rs. 100 Lakh.
2. Stree Shakti Package from SBI – Interest rate: 11.20% onwards
Stree Shakti Package or Stree Shakti Tractor Loan: State Bank of India’s business loan for women-owned businesses features no security required. Additionally, the loan is offered at competitive interest rates with 50% for accessories.
- Interest Rate: 11.20% onwards (p.a.)
- Mortgage Free: No Collateral Required
- Repayment Tenure: Max. up to 36 months, including 1 month moratorium period
3. Shringaar and Annapurna from Bhartiya Mahila Bank
Bhartiya Mahila Bank offers women entrepreneurs a wide range of loans to help them set up new or expand their existing businesses. Two of the more popular options in this category include Shringaar and Annapurna. The Shringaar loan targets women interested in setting up beauty parlors and the Annapurna loan scheme provides financial support to women interested in establishing a food catering business for selling lunch packs.
a.) BMB Shringaar – Loan for Beauty Parlour, Saloon, or Spa
- Age of applicant min 20 years and max 60 years
- The repayment tenure is a maximum of 7 years
- Collateral free loan to be covered under CGTMSE scheme
- Tie up with Naturals, Cavinkare, and Lakme
b.) BMB Annapurna Loan – Food Catering
- Age of applicant min 18 years and max 60 years
- Collateral Free to be covered under CGTMSE
- Repayment tenure up to 3 years
4. Synd Mahila Shakti from Canara Bank
Syndicate Bank’s Synd Mahila Shakthi targets both new and current women entrepreneurs. The scheme is available as either a cash credit to meet the working capital requirements of new and existing business units or as a term loan scheme of up to 10 years. A business seeking such a loan needs to have one or more women owning at least 50% of the financial holding.
5. Shakti Scheme from Bank of Baroda
The Shakti Scheme from Dena Bank supports women entrepreneurs active in a wide range of sectors including agriculture & allied activities, retail trade, microcredit, education, housing as well as enterprises in direct/indirect finance, manufacturing, and services sectors. The maximum ceiling on the loans being offered differs on the basis of the sector in which the enterprise operates. Loan is offered with no processing fee and a rebate of 0.5% on loans up to Rs. 5 lakh.
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Comparison between 5 Leading Loans Schemes Available For Women Entrepreneurs
|Comparison Criteria||Cent Kalyani (Central Bank of India)||Stree Shakti Package (SBI)||Shringaar / Annapurna (Bhartiya Mahila Bank)||Synd Mahila Shakthi (Canara Bank)||Shakti Scheme (Bank of Baroda)|
|Eligibility||Women over 18 years of age with no income ceiling for assistance||Women need to own 51% or more of in the enterprise||Applicant age between 20 to 60 years for Shringaar, 18 to 60 years for Annapurna||Women entrepreneur with adequate knowledge /experience of business activity||Women entrepreneur with >50% ownership of business enterprise|
|Max. Loan Amount||Up to Rs. 100 lakh||Up to Rs. 50 lakh||Up to Rs 10 Lakh for Shringaar/Up to Rs. 50,000 for Annapurna||Up to Rs. 5 Crore||Up to Rs. 20 Lakh for retail trade, education, and housing. Rs. 50,000 under micro-credit schemes|
|Loan Term||1 year to 7 years||Varies based on the loan amount and other factors||7 years (Shringaar)/3 years (Annapurna)||Maximum of 10 years including moratorium period||Varies based on the loan amount and other factors|
|Interest Rates||7.40% onwards||0.50% below the Base rate if the loan amount exceeds Rs. 2 Lakh, otherwise as per the base rate of the bank||As per the bank’s criteria||0.25% below base rate for loans over Rs 10 Lakh, lesser amounts at base rate||0.25% below base rates for women applicants who are majority stakeholders in the company|
|Processing Fee||Nil||Varies based on the loan amount and other factors||Varies based on factors such as loan amount||Nil||Nil|
|Additional Features||No collateral/third party guarantee required|
Hypothecation of all stocks and assets created from the bank’s fund is required as a security
|No security is required for loans of up to Rs. 5 lakh in the tiny sector|
No interest concession for advances provided to retail traders
|Shringaar features tie-ups with Naturals, Cavinkare, and Lakme Ltd.|
Both Shringaar and Annapurna is collateral-free and covered under CGTMSE
|Free credit card|
No Third-party guarantee for loans under the purview of CGMSE
|Microcredit and retail stores are also eligible along with enterprises operating in the agriculture and allied sector|
Note: The mentioned interest rates, fees, and charges are subject to change and depend on the sole discretion of the bank and RBI. GST and service tax shall be levied extra on the mentioned charges.
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Small Business Loans for Women: Features
- Interest Rate: Discounted for Women Borrowers, varies from bank to bank
- Loan Amount: No Minimum Limit, Maximum Loan Amount Up to Rs. 75 lakh
- Repayment Tenure: From 12 months – 5 years
- Collateral: Not required
- Loan Type: Term Loan (Short or Long term), Secured and Unsecured loan, Working Capital Loan
Business Loans for Women: Fees & Interest Rates
- Concessional Interest Rates for Women Borrowers
- Fees or service charges shall vary from lender to lender
- Age Criteria: Min. 18 years and Max. 65 years
- Applicants with no past loan defaults shall be considered
- Individuals, MSMEs, Sole Proprietorship, Partnership Firms, Limited Liability Partnerships (LLPs), engaged in trading, manufacturing and services sector are eligible
- Annual Turnover: To be defined by bank or lender
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Documents Required for Loan Application
- Duly filled application form with 2 passport-size photos of the applicant
- Self-written Business Plan
- Identity Proof – Driving License, Voter ID Card, PAN card, Passport, Aadhaar card, etc.
- Address Proof: Passport, Utility Bills, Aadhar Card, Voter’s ID card
- Income Proof: Last 6 months’ bank statement, Salary Slips, Bank statement
- Business Incorporation Certificate
- Any other document required by the lender
How to apply for Business Loans for Women Entrepreneurs?
To apply for Business Loan, applicants can check, compare and pick from various available loan offers from leading financial institutions. They can fill in and submit the basic required details to further connect with the bank’s representative to carry forward the loan process.
Additional Business Loan Schemes for Women
a) KBL Mahila Udyog Loan from Karnataka Bank
KBL Mahila Udyog loan is offered to meet funding requirements for any source of income generation activity. This loan is offered exclusively to women and the maximum loan amount offered is Rs. 10 lakh, wherein the maximum repayment tenure is up to 120 months. Mahila Udyog Loan is offered to women entrepreneurs where a minimum of 51% of the shareholding and controlling stake is held by them in a firm or company.
b) Mahila Udyam Nidhi Scheme from PNB
Mahila Udyam Nidhi Scheme is offered to women entrepreneurs with the aim of providing financial assistance to set up new projects in the small-scale sector and improving SSI units. This scheme also helps in the expansion, upgradation, technology advancement, and diversification of tiny and SSI units.
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FAQs on Loan for Women Entrepreneurs
Q. How can a woman apply for a small business loan?
Ans. Women borrowers can visit the official website of the bank to apply or can personally visit the bank to perform loan formalities. At paisabazaar.com, women applicants can check and compare various business loan options at competitive interest rates.
Q. What loans are available for women to start a business?
Ans. Business loans for women come in almost every type that can be used by applicants like MSME loans, business loans, working capital loans, term loans, etc.
Q. What is the best possible loan for a women entrepreneur?
Ans. Cent Kalyani from the Central Bank of India is the best possible business or MSME loan for women, as it is offered at a nominal interest rate of 7.40% per annum.
Q. What loan options are there to start a small business for women?
Ans. Small Business Loans or Micro Finance lending is offered by various Micro Finance Institutions, Small Finance Banks, Regional Rural Banks, Co-operative Banks, etc. at concessional interest rates.
Q. What are the government loans for women to start a business?
Ans. Women entrepreneurs can apply for business loans under various Govt. loan schemes like Mudra Yojana, PMEGP, CGTMSE, Startup India, Standup India, psbloansin59minutes.com, etc.