Entrepreneurship ventures or startups are definitely not considered nowadays as new business concepts in India. In order to impetus further growth of entrepreneurial initiatives, leading private, and public sector banks, NBFCs have introduced various business loan schemes for women entrepreneurs. Let’s take a look at the 5 most popular loan schemes for women entrepreneurs in India at competitive as well as concessional interest rates.
1. Cent Kalyani from the Central Bank of India
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.
- Interest Rate: 7.50% – 7.75% p.a.
- Purpose: To meet day-to-day requirements, such as the purchase of plant & machinery/equipment, etc., and working capital expenditure.
- Nature of Loan: Term Loan fund-based working capital facility – Overdraft/ Cash Credit non-fund-based working capital – Letter of Credit/ Letter of Guarantee, etc.
- Loan Amount: Up to Rs. 100 lakhs
- Processing Fee: Nil
- CGTMSE Coverage: Available
- Collateral/Security or Third Party Guarantee: Not required, as covered under Guarantee cover of CGTMSE
- Insurance: Comprehensive insurance of stock, machinery/equipment, etc with bank clause
- Women entrepreneurs who are rendering services to rural and cottage industries, MSMEs, and women working in the farming, retailing, and government-backed firms can avail business loan
2. MUDRA Loan
Launched in 2015, MUDRA Yojana under Pradhan Mantri Mudra Yojana (PMMY) is a loan scheme offered by banks for individuals, startups, business owners, as well as for women entrepreneurs across India. Under this scheme loan amount up to Rs. 10 lakh is offered to women who want to start their own business or to expand the existing one. The loan amount is offered under three categories named Shishu, Kishor, and Tarun. Find below the basic features of the loan scheme offered by banks and NBFCs under Mudra Yojana:
- Concessional Interest Rates for Women Entrepreneurs
- Collateral Free Loans: No collateral or security is required by banks or NBFCs
- Loan Type: Term Loan / Overdraft
- 3 Loan Categories: Shishu, Kishor, and Tarun
- Loan Amount: No minimum limit and maximum up to Rs. 10 lakh
- Repayment Tenure: Up to 5 years
- Processing Fee: Nil to 0.50% of the sanctioned loan amount
- Loans for Women living in both Urban and Rural regions of India
Mudra loans are offered to women to encourage women entrepreneurs and to promote the MSME sector.
3. Shringaar and Annapurna Loan Schemes from Bhartiya Mahila Bank (SBI)
Bhartiya Mahila Bank, recently merged with SBI 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, now merged with Canara Bank 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 (BOB)
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 0.50% on loans up to Rs. 5 lakh.
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Comparison between 5 Leading Loans Schemes Available For Women Entrepreneurs – 2022
|Comparison Criteria||Cent Kalyani (Central Bank of India)||MUDRA Loan||Shringaar / Annapurna (SBI)||Synd Mahila Shakthi (Canara Bank)||Shakti Scheme (Bank of Baroda)|
|Eligibility||Women over 18 years of age with no income ceiling for assistance||Minimum 18 years & Max. 65 years||Applicant age between 20 to 60 years for Shringaar, 18 to 60 years for Annapurna||Women entrepreneurs with adequate knowledge /experience of business activity||Women entrepreneurs with >50% ownership of business enterprise|
|Max. Loan Amount||Up to Rs. 100 lakh||Up to Rs. 10 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||Term Loan / Overdraft||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||As per applicant’s profile and business requirements||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||Nil||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 collateral/security is required from any lender|
Concessional interest rates for women borrowers
Debit card available named as Mudra card
|Shringaar features tie-ups with Naturals, Cavinkare, and Lakme Ltd.|
Both Shringaar and Annapurna are 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|
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Small Business Loans for Women: Features
- Interest Rate: Discounted or concessional interest rates for Women Borrowers that shall vary from bank to bank
- Loan Amount: No Minimum Limit, Maximum Loan Amount Up to Rs. 10 lakh, may exceed
- Repayment Tenure: From 12 months to 5 years
- Collateral/Security or Third-party Guarantee: Not required
- Loan Type: Term Loan (Short or Long term), Unsecured loan, Working Capital Loan, Overdraft
- 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
Additional Loan Schemes for Women Entrepreneurs
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 improve SSI units. This scheme also helps in the expansion, upgradation, technology advancement, and diversification of tiny and SSI units.
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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. Secondly, the 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 7.50% – 7.75% p.a.
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 NBFCs, Micro Finance Institutions (MFIs), Small Finance Banks (SFBs), Regional Rural Banks (RRBs), 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.