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 their current one.
- Interest Rate: 7.90% p.a. – 8.25% 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 the Guarantee cover of CGTMSE
- Insurance: Comprehensive insurance of stock, machinery/equipment, etc with a 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
Note: With effect from 10th Nov 2022, Bank’s 1-year MCLR stands at 7.65% & Additional Interest concession of 0.25% on the interest rate if an account is rated by an external agency.
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2. Mudra Loan under PMMY
Launched in 2015, MUDRA Loan under Pradhan Mantri Mudra Yojana (PMMY) is a loan scheme offered by banks for individuals, startups, and business owners, as well as women entrepreneurs across India. Under this scheme loan amount up to Rs. 10 lakh are offered to women who want to start their own business or 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 the Mudra Yojana:
- Concessional Interest Rates for Women Entrepreneurs
- Collateral-Free Business 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. ICICI Bank – Self Help Group-Bank Linkage Programme (SBLP)
ICICI Bank has recently introduced Collateral-free business loans for SHG of 10-20 women. The maximum loan amount offered under this scheme is Rs. 10 lakh with a repayment tenure of up to 3 years.
4. Stand-Up India
Stand Up India is a loan scheme initiated by the Govt. to offer credit facilities for setting up Greenfield Enterprise for a loan amount of Rs. 10 lakh to Rs. 1 crore. The maximum repayment tenure is up to 7 years with a moratorium period of 18 months.
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, and 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. The loan is offered with no processing fee and a rebate of 0.50% on loans up to Rs. 5 lakh.
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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 Proprietorships, Partnership Firms, and Limited Liability Partnerships (LLPs), engaged in trading, manufacturing, and services sector are eligible
- Annual Turnover: To be defined by the 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) PNB Mahila Udyami
Business loan scheme of up to Rs. 10 lakh for new & existing units with tenure of 3-5 years (Term Loan) and 3 years (Overdraft Facility) and Margin of up to 25%.
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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 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.