Business Financing Options in India for Women Entrepreneurs

Out of the 58.5 million entrepreneurs in India, around 14% are women as per the Ministry of Statistics and Programme Implementation in their 6^th Economic Census. While 65% of women entrepreneurs work in retail and manufacturing, around 13% are engaged in the agricultural sector.

The number of businesses run by women has seen a considerable rise over the last decade along with an ever increasing growth chart.

Better infrastructure, improved access to education, and growing acceptance of women entrepreneurs are some of the factors contributing to this rise. Another critical factor is the easy availability of financing.

The Government and also various NBFCs provide business loans for women entrepreneurs to help them establish their own firm.

The Indian Government currently offers two types of loans for women:

1. Stand-Up India scheme

The Stand-Up India Scheme enables at least one Scheduled Tribe (ST) or Scheduled Caste (SC) and one woman to avail loans from a centralised financial institution. Borrowers can avail loans between Rs. 10 Lakh and Rs. 1 Crore.

The applicants have to be at least 18 years old to avail this loan. This scheme is only available to those looking to establish a greenfield firm.

The Stand-Up India Scheme provides financing of up to 75% of the project cost. Borrowers can bring in the rest 25% from other State or Central Government scheme. However, they have to contribute at least 10% of the project cost on their own at all times.

2. MUDRA

The Micro Units Development and Refinance Agency Bank (MUDRA) is part of the Pradhan Mantri Mudra Yojana (PMMY) aimed at providing loans up to Rs. 10 Lakh to micro enterprises.

The MUDRA scheme provides three types of products:

• Tarun - Loans between Rs. 5 Lakh and Rs. 10 Lakh.
• Kishor – Loans between Rs. 50,000 and Rs. 5 Lakh.
• Shishu – Loans up to Rs. 50,000.

Lenders are allowed to provide additional features like a lower rate of interest when sanctioning a loan for women entrepreneur under this scheme.

NBFCs also provide business finance. These loans are one of the great sources of funding for women entrepreneurs and have some features that are more beneficial than the above two schemes.

For example:

1. High and collateral-free financing options

Women can avail funds up to Rs. 30 Lakh for utilisation in any business need such as buying new equipment, leasing workspace, to boost business operational finances, etc. Plus, these loans are also collateral-free and require no asset as collateral.

2. Rapid approval

One of the ideal features of a business loan for women entrepreneur is that NBFCs can approve a loan within 24 hours.

3. Pre-approved offers

NBFCs and banks provide pre-approved offers which save time when availing financing by making the process straightforward. Pre-approved offers are available on business loans, personal loans, home loans, and several other financial products and services.

4. Short-term and long-term repayment tenors

Tenors for business loans range from 12 to 96 months giving ample time for prepayment to women.

5. Minimal documents required

Women have to provide only the following documents:

• KYC documents – PAN, Passport, Aadhaar, Voter ID, Driving License, etc.
• Certificates or documents proving the existence of the business.
• Bank account statement of the last month.
• Financial documents.
• Income tax returns of the previous year.

NBFCs may also require documents other than the ones mentioned above.

6. Simplistic eligibility criteria

Financial institutions need women to satisfy the following business loan eligibility criteria:

• Age between 22 and 55 years.
• A business that is at least 3 years old.

Some NBFCs may also require customers to hold a minimum CIBIL score of 750. A high credit score can help women benefit from lower business loan interest rates.

Women can apply for a business loan online within a few minutes. Some NBFCs also provide the option to manage the loan account online.