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Wednesday, October 5, 2022

5 Best Small-Business Loans for Women Entrepreneurs in 2022

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The COVID19 pandemic has seen the rise of many new businesses as well as the end of some old and established brands. Among these, women are slowly making a foray into the business sector by availing loan for women. Courtesy of the widespread use of online resources and small business loans, many women have opted for self-employment owing to its attractive perks in addition to the financial freedom that it affords. 

However, it is to be noted that women entrepreneurs remain a distinct minority, despite the numbers having significantly improved during the pandemic. Spurring on this growth, efforts have been made by both the Indian government as well as several private banks in form of schemes, programmes or a loan for women dedicated to providing business finance. This is to further encourage women to either start their business venture or go ahead with expanding their already existing ventures.

Some well-known schemes that provide small business loans to women include:

MUDRA Yojana – This loan scheme, under Pradhan Mantri Mudra Yojana (PMMY), is available to all individuals including women entrepreneurs in India. There are three types of loans, namely Shishu, Kishor and Tarun. Offered by most banks across India, loans for women up to Rs 10 Lakhs can be issued either as start-up or expansion capital for the respective business venture.

Cent Kalyani – An initiative started by the Central Bank of India, Cent Kalyani enables women above 18 years of age to avail loans up to Rs 1 crore. The loan tenor ranges from a year to 7 years and there is no collateral required. Interest rates range from 7-8% and the processing fee is non-existent.

Mahila Udyam Nidhi Scheme – Business loans under Mahila Udyam Nidhi Scheme can be availed under Punjab National Bank. The interest rate depends on the project the individual is going to utilise the loan for. Amounts of such small business loans can go up to Rs 10 Lakhs and the loan tenor is generally 5 years.

Shakti Scheme – Extended by Bank of Baroda, this scheme can be applied by women entrepreneurs working in a broad range of sectors. Small business loans up to Rs 1 lakh can be taken for various purposes such as agriculture, education, housing etc. However this amount is subject to modification depending on the specific sector it is for. There is no processing fee. 

Shringaar and Annapurna – Especially for businesswomen, the Bhartiya Mahila Bank provides a wide range of loans to financially support them in setting up a business. While Shringaar is aimed towards women-led start-ups in the beauty industry, Annapurna specifically caters to women establishing themselves in the catering sector.

Other than these, there are also several more schemes that the government and various banks of India have come up with. The Stree Shakti Package from the State Bank of India (SBI) and Synd Mahila Shakti from Canara Banks are two such examples.

Under the Stree Shakti Package, women entrepreneurs only need to own a majority of the shares of the business to be eligible. Loans under this programme are unsecured and there is no processing fee. 

To avail these small business loans, women entrepreneurs need to submit the relevant documents as specified by the lending authority. Not only is it important to fill accurate information in the application form, but applicants also need to provide 2 passport sized photographs of themselves. Women also need to prove their identity, submit address proof, and the certificate of business. 

Availability of a loan for women is an ideal financial solution for starting a venture without having to depend on anyone, or worrying about liquidity. 

If you are looking for a scheme which has been designed bearing only women and their specific circumstances, then Cent Kalyani which is offered by the Central Bank of India is worthy of consideration. Likewise, Mahila Udyam Nidhi Scheme which is an initiative of Punjab National Bank, and Shakti Scheme, a solution offered by Bank of Baroda, are also designed to empower women entrepreneurs. 

To avail of these small business loans, women need to provide all the relevant documents to the lenders along with their passport-size photographs and the certificate of their venture. The main objective of loan for women is to provide a viable and flexible financial solution that facilitates starting a venture without having to depend on anyone else. 

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