Startup/Small Business Loans for Women
Many banks and financial companies in India offer small business loans to women to help them run or expand their small businesses. The interest rates for these loans range up to 25% p.a. while the repayment tenure can go up to 5 years. Women can avail a maximum of Rs. 1 crore as loans to fund their small businesses.
Similar to small business loans for women, they can opt for various personal loan.
Top Banks Offering Small Business Loans to Women
Name of the Bank | Interest Rate | Loan Amount | Repayment Tenure |
Central Bank of India |
| Up to Rs.1 crore | - |
State Bank of India | Competitive rates of interest linked to MCLR | Rs.10 lakh - Rs.1 crore | Up to 7 years |
Mudra | Linked to MCLR | Up to Rs.10 lakh | Depending on the borrower’s business and cash flow |
Bank of Baroda | At the discretion of the bank | Up to Rs.20 lakh | At the discretion of the bank |
Lending Kart | 15% p.a. onwards | Up to Rs.2 crore | Up to 36 months |
SMFG India Credit | 13% p.a. - 21% p.a. | Up to Rs.75 lakh | 12 months - 48 months |
Tata Capital | 12% p.a. - 25% p.a. | Rs.40,000- Rs.90 lakh | 12 months - 60 months |
Punjab National Bank | Depends on Project cost | Up to Rs.10 lakh | Up to 5 years |
Features of Start up Business Loans for Women
Cent Kalyani Scheme - Features
- The scheme is targeted at women entrepreneurs who wish to start a new business or expand their existing business in the manufacturing and services sector.
- The loans offered are in the form of overdraft, cash credit, letter of credit, letter of guarantee, etc.
- No collateral security or third-party guarantee required to avail the loan.
- You need not pay any processing charges to avail the loan.
- Optional comprehensive insurance is available for machinery equipment, stocks, etc.
Rate of Interest | Margin | Processing Fee | Quantum of Loan |
| 20% | Nil | Up to Rs.1 crore |
Mahila Udyam Nidhi Scheme - Features
- This scheme offers support to women entrepreneurs to set up new projects or enhance viable sick units in the small-scale sector.
- The loan is offered by Small Industries Development Bank of India (SIDBI) and Punjab National Bank.
- Different plans are offered for the purchase of auto-rickshaws, beauty parlours, day care centers, etc.
- The Mahila Udyam Scheme also offers support with the upgradation and modernisation of existing projects.
- The interest rates depend on the market rates and are reviewed regularly.
Rate of Interest | Loan Amount | Repayment Tenure | Moratorium Period |
Based on market rate | Rs.10 lakh | 3-5 years | 3-6 months |
Pradhan Mantri Mudra Yojana - Features
- All individuals, including women, are eligible for the Mudra loan.
- These loans are offered by commercial banks, small finance banks, regional rural banks (RRBs), cooperative banks, non-banking financial companies (NBFCs), and microfinance institutions.
- The loans are offered under 3 categories - Shishu, Kishore, and Tarun to fund the various stages of the small/micro enterprise business units.
- Loans availed under the Mudra loan can be used for setting up or expanding the business enterprises in the manufacturing, trading, and services sector.
- The loans will be in the form of working capital and term loan.
Rate of Interest | Quantum of Loan | Margin | Processing Fees |
Will vary from lender to lender |
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|
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Bank of Baroda - Shakti Scheme
- Women are eligible for this scheme.
- Women working in agriculture, retail trade, housing, education, micro-credit, and MSME industries can avail this loan.
- Margin of loan decided as per the stipulations set by the bank and RBI.
Rate of Interest | Loan Amount | Repayment Tenure | Moratorium Period |
At the discretion of the bank | Up to Rs.1 crore | At the discretion of the bank | Contact the bank |
State Bank of India Business Loan for Women
Listed below are the key highlights of the business loan offered by State Bank of India:
- Minimum mandatory margin of 10%.
- No security required.
- Processing fee is 0.20% of the loan amount.
Lending Kart Business Loan for Women
Listed below are the key highlights of the business loans offered for women by Lending Kart:
- Online business loan application.
- No requirement for collateral.
- Attractive interest rates.
- Business loan disbursal within 3 days from approval.
- Processing fee between 3% of the loan amount availed.
Tata Capital Business Loan for Women
Listed below are the key highlights of the business loan for women offered by Tata Capital:
- Structured EMIs to suit the financial situation of the women borrower.
- Minimum documentation
- Customised loan plans for women.
- No requirement for collateral to avail the business loan.
- Strong after sales process.
Udyogini Scheme
The Udyogini Scheme's objective is to promote female entrepreneurship. This scheme can be availed at easy terms and affordable interest rates online. Using this loan, women owners can start business enterprises, agricultural set-ups as well as small scale industries. Self-employed female entrepreneurs and retail traders can also apply for the Udyogini Scheme.
For women from Scheduled Castes and Scheduled Tribes, the unit cost ranges from a minimum of ₹1,00,000 to a maximum of Rs.3 lakh. The subsidy offered is 50% of the loan amount, with a family income limit of below Rs.2 lakh per year. For women in the Special Category and General Category, the maximum unit cost is Rs.3 lakh. Special Category women and General Category women are eligible for a subsidy of 30% or a maximum of Rs.90,000. Selected beneficiaries also receive Entrepreneurship Development Program (EDP) training.
Mahila Udyam Nidhi Scheme
The Mahila Udyam Nidhi Scheme or MUN is provided under Small Industries Development Bank of India. Under this scheme, women entrepreneurs can get maximum financial support of up to Rs.5 lakh for the purpose of establishing new industrial venture in the small scale sector.
Aside from the encouraging fact that these lending schemes greatly encourage and support women, many are still unable to take advantage of these exclusive loans. This is due to lack of knowledge of the existence of these schemes and its features. Becoming a part of a woman's network can prove helpful in availing these women-centric loans. Microfinance institutions, NGOs, government schemes and self-help groups can help women in interacting with fellow female entrepreneurs, enabling them to learn from their experience.
90% of the project cost will be provided as loan under the scheme with interest rate up to 12% p.a. and maximum repayment tenure of 6 years. The loan can be repaid either quarterly or half-yearly.
Eligibility Criteria for Small Business Loans for Women
The basic eligibility for women to avail a small business loan is that they should either own the whole small or microenterprise or hold at least 51% of the stakes in the enterprise. The other eligibility criteria such as minimum age, income, etc., will vary from lender to lender.
Documents Required to Apply Business Loans for Women
Documents | Conditions |
Application form | Filled and duly signed |
KYC Documents | Business entity proof, partnership deed, incorporation certificate, shops and establishment certificate, Articles of Association (AOA) |
Financials |
|
Bank Statements | For the last 6 months |
Photographs | Passport-size photograph of applicant/co-applicants |
PAN Card |
|
Address Proof |
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How to Apply for a Small Business Loans for Women
There are various banks and lenders which provide small business loans for women. You can visit the website of these banks and apply for a loan online. The steps that you will generally have to follow is very simple:
- Apply for business loans by visiting the website
- Submit the application form and upload the necessary documents
- The bank will review the documents and if they are alright, the loan will be disbursed to your bank account within 3 business days
Benefits of Small Business Loans for Women
- Easily accessible - These days, small business loans for women are offered by many leading banks and financial institutions to encourage women entrepreneurs. Also, these loans do not require women to provide collateral, making it easy to avail.
- Concession on interest rates - Women who wish to avail small business loans can enjoy a concession on the interest rates.
- Easy repayments - Women entrepreneurs availing small business loans can repay the loan amount in easy equated monthly instalments (EMIs). Lenders understand that a business can go through many ups and downs which is why they offer easy and flexible repayment options.
- Business growth - Small business loans can encourage women entrepreneurs to start their own business or scale up their existing business. For any business to grow, it is imperative to have adequate funds and that's when small business loans can help.
FAQs on Small Business Loans for Women
- Can women without jobs apply for loans?
If an applicant owns property, they may be eligible for a secured loan even if they do not have a reliable source of income. Those without a job have a lower loan-to-value ratio than those who have a reliable source of income.
- Do a woman need to provide collateral to avail a small business loan from a bank?
There are various banks and NBFCs who provide small business loans to women without collateral. However, it is important that the applicant conducts their research regarding a bank asking for a collateral before applying for a loan.
- What is the EMI that I need to pay towards my small business loan?
The EMI amount that you need to pay each month will depend on the amount of loan you avail, the interest rate charged by the lender, and the repayment tenure you choose. You can use the EMI Calculator to ascertain the EMI on your small business loan by entering the loan amount, tenure, and the interest rate.
- Do I have to provide security to avail a small business loan?
Providing collateral or security is not mandatory to avail a small business loan but providing one can help you fetch lower interest rates and can enhance your loan amount.
- I have a small business that I set up with my husband. Can I get a discount on the interest rate on a small business loan to expand our business?
If you wish to avail a small business loan to scale your business, you can avail the ones that are meant especially for women entrepreneurs as the interest rates are lower. However, to be eligible for such loans, you need to own 51% stakes in the business.
- I wish to open a fashion boutique. Am I eligible to get a business loan?
Yes, under the Pradhan Mantri Mudra Yojana (PMMY), you can avail a business loan to start your own fashion boutique. Any activity that results in income generation is eligible for a small business loan under the Mudra scheme.
- Can I avail the Mudra loan from any bank?
Yes, All commercial banks, RRBs, small finance banks, microfinance institutions, NBFCs, etc., offer loans under the Mudra scheme.
- What obstacles do Indian women entrepreneurs face?
The majority of female entrepreneurs don't have the social support from their peers, family, or immediate ecosystems that they need to start their firms. Lack of mentorship from the business community is one of the biggest issues facing women entrepreneurs in the nation.
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