Loans
The blog discusses the increasing trend of individuals, especially women, leaving high-income jobs to start their own businesses in India. It highlights various business loans available to women entrepreneurs to support their ventures and help them succeed.
Business loan options for women include:
The Indian economic platform is witnessing a significant change as more and more individuals ditch their high-income jobs to assume entrepreneurial roles. The startup market, resplendent with various ideas and options, not only offers a very lucrative income opportunity but also a space to display one’s creative abilities and business acumen.
It is heartening to see the significant rise in the number of women donning the role of entrepreneurs, with small businesses flourishing and aiming towards bringing about a positive change in society.
Small businesses like home-based food catering, beauty parlours, etc., provide a means for women to carve their way into the mainstream market slowly, and to assist them in their several entrepreneurial initiatives is the easy availability of several Business Loans from financial institutions and the Government.
Some of the different types of business loans that are available are:
These loans are primarily available for existing businesses, though some lenders offer Small Business Loans to start-ups from the SME category as well. One such loan is the Line of Credit or LOC, which mainly caters to small to medium-sized businesses for female entrepreneurs.
One must have a credible credit score to meet small business loan eligibility. The lender uses this three-digit score to establish the sanction amount and interest rate. Besides that, KYC and certain business-related documents are required for instant approval.
The key benefits of small business loans are:
This loan product is ideal for a medium-scale business. This loan offers funding up to ₹50 lakh for a tenure ranging from 3-5 years. Unlike SME loans for women, it does not require detailed paperwork, thereby functioning as an instant loan for an established business.
To qualify for this loan, one must have at least a year old company with financials showing profit and positive business growth. Other than that, the applicant has to submit the current account statement of at least one year to the lender.
The key benefits of commercial business loans are:
This business finance for women helps start a small or a home-based business. One can obtain funds against investments in the stock market, mutual funds and life insurance policies, and up to 60%-75% of its market value. These short-term loans are available for 4-5 years.
To meet the eligibility criteria for a loan against securities, one needs to provide ownership proof of the securities to be used as collateral. It is important to mention that, unlike online applications, this loan has a detailed documentation process and requires the applicant's in-person visit to the lending bank's branch.
The key benefits of a loan against securities are:
This business financing option is ideal for women planning to start a home-based business. The loan is offered based on the applicant’s financial ability. This condition may make it challenging for a homemaker with no business experience to qualify for a large amount.
However, to simplify the process, there is an option to add a co-applicant, such as a spouse, which can increase eligibility. This loan is highly flexible and can be used for both personal and professional needs.
The basic eigibility criteria for personal loans are having a steady monthly income and a decent credit score.
The key benefits of personal loans for women are:
The government of India is also playing a very active role in ensuring a spur in the growth of these small businesses managed by women entrepreneurs. One such common Business Loan for women in India is the Pradhan Mantri Mudra Yojana. It has three loan options – Shisha, Kishor, and Tarun- for start-ups and existing businesses.
Shishu Loan Option offers a loan amount of ₹50,000 and is available for women entrepreneurs of small-scale businesses, while Kishor and Tarun allow an amount of up to ₹10 lakh for a tenure of up to 5 years. The interest for these loans is the lowest, with minimal eligibility requirements, but the processing time is quite long.
With this incredible financial support system in place, women are leaving no stone unturned to break through the stereotypical roles they have been conditioned to play. It is not easy to establish and maintain a business, but our women entrepreneurs are doing a commendable job.
Click here to get started with your Business Growth Loan application.
Read more on how to get a Business Loan here.
*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.