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Business Loans For Women

IndianMoney.com Research Team | Updated On Monday, June 25,2018, 07:13 PM

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Business Loans For Women

 

 

Women today are perfectly capable of handling their affairs and don’t necessarily need the men of the household, to take care of their expenses or to run a business or pay the bills. Women do everything on their own. They can handle any kind of job and are strong-minded when it comes to contributing to society. Banks have understood these capabilities and are offering Small Business Loans to women who run a successful business, but need a little financial help.

Many financial institutions like banks and NBFCs have come up with schemes, that are exclusively framed for women entrepreneurs. These schemes have relaxed terms and conditions, lesser rate of interest and lower collateral/security. Some financial institutions have also set up a cell within their branches to counsel and train women entrepreneurs to promote and market their businesses.

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Business Loans for Women

Types of Small Business Loans Offered to Women in India

The various loan schemes offered to women entrepreneurs for their small businesses are as follows:

1. Cent Kalyani Scheme

This scheme is offered by the Central Bank of India. Women can avail loans to start new ventures. The loan is offered to new as well as experienced business owners, self-employed and professionals. Women, who are engaged in agricultural and allied activities and in village and cottage industries, can avail loans under this scheme.

2. Stree Shakti Package for Women Entrepreneurs

This scheme is offered to women who have 50% ownership in a small business. The women entrepreneur needs to pursue the Entrepreneurship Development Programmes (EDP) organized by the state agency. All necessary assistance will be provided and you (woman entrepreneur) will get an interest concession of 0.05% under the scheme. Interest concessions can be availed on loans above Rs 2 Lakhs.

SEE ALSO: Why Your Business Needs Insurance?

3. Dena Shakti Scheme

This scheme is offered by the Dena bank to promote female owned businesses, by providing financial assistance to them. The loan can be availed at an interest concession of 0.25%. The loan is offered to women engaged in manufacturing, agricultural and allied activities. Even women running small enterprises, micro-credit or retail stores can avail loans under this scheme.

4. Udyogini Scheme

This scheme is offered by the Punjab and Sind Bank to motivate women entrepreneurs to obtain loans at low interest rates and establish small scale industries. This loan is also available for retail traders and self-employed women entrepreneurs.

See Also: Will Bank Raise Interest Rates?

5. Mahila Udyam Nidhi Scheme

This scheme is offered by Small Industries Development Bank of India (SIDBI) to provide financial assistance up to Rs 10 Lakhs to female entrepreneurs to set up new ventures in the small scale sector. Be Wise, Get Rich.

What is a Business Loan?

A business loan is meant to offer capital to businesses for growth and operations. Business loans are an ideal way to manage business expenses like new equipment acquisition, working capital needs, buying business vehicles, fund business expansion or simply start a new business venture. Business loans can be easily availed from banks where the borrower must repay the principal amount along with interest.

Business Loan for Women:

Business loans are the loans offered to woman entrepreneurs for starting or funding business ventures. Business loans for woman have certain features like nominal interest rates, easy documentation, quick disbursal of loans and longer tenure. Woman beneficiaries can avail business loans at special concessional rates and relaxed terms and conditions. These loans are meant to encourage aspiring woman entrepreneurs, enjoy sustainable development and for the creation of jobs in rural and urban areas.

Business Loans for Women Eligibility Criteria:

These business loans are tailor-made to suit the business needs of woman entrepreneurs and so the foremost criteria to avail these loans are the business must be headed by a woman. In case of partnership business, a business loan for a woman can only be availed if a woman holds the majority stake (51% or above). The eligibility criteria to avail business loans for women are as follows:

  • The borrower must be in the age group of 21 years to 65 years.
  • The business must have annual turnover of Rs. 1.5 Lakhs.
  • The borrower must have good credit ratings. Good credit ratings enable the entrepreneur secure loans easily, at better interest rates and loan terms.
  • The applicant must not have any criminal background.
  • Business stability is a major concern vis-a-vis business loans. In case the business does not generate stable returns, the loan application may be rejected.

Documents Required for Business Loans for Women:

Listed below are the documents that must be submitted by the applicant to avail business loans:

  • Identity proof: Driving license, voter ID card, passport, Aadhaar card.
  • Address proof: Ration card, Aadhaar card, and passport.
  • Residence proof: Utility bills, landline bills, water bills.
  • Income proof: Bank statement of the previous 2 years.
  • Financial documents: Income tax returns (previous 2 years), profit and loss statement of the previous 2 years, balance sheet audited by a C.A.
  • Business ownership: Partnership deed (for partnership business), sole proprietor deed (singly owned business), articles of association, certified copy of the memorandum.

Small Business Loans for Women Interest Rate and Charges:

Small business loans are mainly availed by woman entrepreneurs to meet small business needs like funding for equipment, meeting working capital needs or for the expansion of their businesses. There are various banks, financial institutions and online loan aggregators which offer woman entrepreneurs, loans for their businesses at competitive interest rates.

Some vendors offer special terms for SMEs and start-up ventures run by a woman like flexible loan facility, online loan management, flexible repayment tenure, no collateral requirement and micro-credit facility for small business ventures. The rate of interest offered by most of the banks is a concession on base rate on a business loan. Banks generally do not charge processing fees and pre-payment charges from woman beneficiaries.

How to Apply for Business Loans for Women?

  • Business loans for women are available at competitive interest rates at banks, NBFCs and also online.
  • To apply for a business loan from the banks, you must either login to your net banking account or apply for a loan or you can visit the nearest bank branch and talk to the bank executive, directly.
  • Before selecting any loan, make sure to check various lending options available online and also offline. Do thorough research on which bank offers lower interest rates on business loans for women and also better terms and conditions.
  • The next step is the submission of the application form along with the relevant documents. If you apply online, you must then fill the online application form and upload the documents and make a submission. For offline application downloads, fill up with authentic details and attach copies of relevant documents.
  • On submission of the loan documents, the bank verifies and processes your loan application. You will either receive an e-mail or SMS regarding the approval or rejection of your loan application.

How to Calculate Business Loans for Women?

You can calculate the monthly EMIs of business loans for a woman through an online EMI calculator. The online EMI calculator helps understand the monthly installments and the time required to repay your loans. You can make better business decisions, if you already know the monthly expenses incurred with the business loan.

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