As an Indian woman, you probably have some great business ideas that you want to see come to life as you start your entrepreneurial journey. You also know that the most important thing you need to start a business, apart from the idea, is capital.
If the problem of financing your woman-owned business in India has been holding you back, there’s help available in the form of government loans and small business loans for women entrepreneurs and startups.
Before you start with the process of getting a loan for your business, make sure that you are prepared with everything you need to know. Banks have certain criteria that you need to fulfil in order to get a loan. You are also going to need a top-notch business plan. Make sure you do a proper analysis of all the marketing strategies you plan to use when the time comes to grow your business.
Once you have done these basic steps, you can start looking for funding options available to you. There is a wide array to choose from depending on your needs. Read on to find out more about these financing opportunities.
Government Funding Schemes For Start-ups
The accelerating number of start-ups in India have access to many funding options. However, it is a challenge to get funding when the business is just an idea or is in the early stage. Also, the Micro, Small, and Medium Enterprises (MSME) sector in India only has limited access to formal credit. However, in the recent budget announcement, the government offers loans of up to 1 crore to MSMEs within 59 minutes through an online portal for promoting ease of doing business in this sector. The interim budget has already announced a 3 per cent tax benefit for women-owned MSMEs.
Along with the Small Industries Development Bank of India (SIDBI), lending to new businesses and MSMEs directly rather than channelising it through banks, the Government of India has decided to roll out start-up business loan schemes for MSMEs and start-ups.
Some of the most notable and popular schemes offered by the Indian government for startups and MSMEs are as follows:
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Bank Credit Facilitation Scheme
Headed by the National Small Industries Corporation (NSIC), this scheme is targeted at meeting the credit needs of the MSME units. The NSIC has partnered with various banks to provide loans to the MSME units. The repayment tenure of the scheme ranges between 5 years and 7 years but in special cases, it can be extended up to 11 years.
Learn more: National Small Industries Corporation
Pradhan Mantri Mudra Yojana
Headed by the Micro Units Development and Refinance Agency (MUDRA), the scheme aims at offering loans to all kinds of manufacturing, trading, and service sector activities. The scheme offers a loan under three categories in amounts ranging between Rs. 50,000 and Rs.10 lakh.
Learn more: Pradhan Mantri Mudra Yojana
Credit Guarantee Scheme
This loan can be availed by both new and existing MSMEs that are involved in service or manufacturing activities but excludes educational institutions, agriculture, retail trade, Self Help Groups, etc. Up to Rs.200 lakh can be borrowed under this scheme headed by the Credit Guarantee Fund Trust for Micro and Small Enterprises.
Learn more: Credit Guarantee Scheme
Headed by SIDBI, this scheme extends loans to enterprises in manufacturing, trading, or services. Under this scheme, loans ranging between Rs.10 lakh and Rs.1 crore can be availed. The repayment of loans taken under this scheme can be done in seven years while the maximum moratorium period allowed is 18 months.
Learn more: Stand-up India
Sustainable Finance Scheme
Also headed by the SIDBI, the scheme aims at offering loans to industries that deal in green energy, renewable energy, technology hardware, and non-renewable energy. The government started this scheme with an intent to offer support to the entire value chain of cleaner production/energy efficiency and sustainable development projects.
Learn more: Sustainable Finance Scheme
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Government Funding Schemes For Women Entrepreneurs
Governments at the central and state levels have launched financial schemes for micro-units, which could ensure hassle-free loan issuance to women entrepreneurs and go a long way in boosting women entrepreneurship. The Small Industries Development Bank of India (SIDBI) has always been a supportive structure for people involved and interested in the MSME sector, and it is especially liberal for women.
To encourage women to build up small business setups and use their skills, SIDBI offers government loans for businesses in India.
We have listed some business loans from the government sector banks for Indian women entrepreneurs.
This scheme is offered by the State Bank of Mysore for those women entrepreneurs who are setting up food catering industry to sell packed meals, snacks, etc. The amount granted as a loan under this scheme can be used to fulfil the working capital needs of the business like buying utensils and other kitchen tools and equipment. Under this loan, a guarantor is required along with the assets of the business being pledged as collateral security. The maximum amount of money that is granted is ₹50,000 which has to re-paid in monthly instalments for 36 months.
Stree Shakti Package For Women Entrepreneurs
This scheme is offered by most of the SBI branches to women who have a 50% share in the ownership of a firm or business and have taken part in the state agencies run Entrepreneurship Development Programmes (EDP). The scheme also offers a discounted rate of interest by 0.50% in case the amount of loan is more than ₹2 lakhs.
Learn more: Stree Shakti Package For Women Entrepreneurs
Bharatiya Mahila Bank Business Loan
This loan is a support system for budding women entrepreneurs looking to start new ventures in the fields of the retail sector, loan against property, MICRO loans, and SME loans. The maximum loan amount under this loan goes up to ₹20 crores in case of manufacturing industries and a concession is available to the extent of 0.25% on the interest rate and interest rates usually range from 10.15% and higher. Additionally, there is no requirement of collateral security for a loan of up to ₹1 crore.
Dena Shakti Scheme
This scheme is provided by Dena bank to those women entrepreneurs in the fields of agriculture, manufacturing, micro-credit, retail stores, or small enterprises that are in need of financial assistance. The interest rate is decreased by 0.25% along with the maximum loan amount being ₹20 lakhs for retail trade, education and housing.
Learn more: Dena Shakti Scheme
This scheme is offered by Punjab and Sind Bank to provide women entrepreneurs involved in agriculture, retail and small business enterprises to get loans for business at flexible terms and concessional interest rates. The maximum amount of loan under this scheme for women between the age bracket of 18-45 years is ₹1 lakhs but requires your family income to be set at ₹45,000 per annum for SC/ST women.
Learn more: Udyogini Scheme
Cent Kalyani Scheme
The scheme is offered by the Central Bank of India with the aim of supporting women in starting a new venture or expanding or modifying an existing enterprise. This loan can be availed by women who are involved in village and cottage industries, micro, small and medium enterprises, self-employed women, agriculture and allied activities, retail trade, and government-sponsored programs. This scheme requires no collateral security or guarantor and charges no processing fees and the maximum amount that can be granted under the scheme is ₹100 lakhs.
Learn more: Cent Kalyani Scheme
Mahila Udyam Nidhi Scheme
This scheme is launched by Punjab National Bank and aims at supporting the women entrepreneurs involved in the small-scale industries by granting them soft loans that can be repaid over a period of 10 years. Under this scheme, there are different plans for beauty parlours, daycare centres, purchase of auto-rickshaws, two-wheelers, cars, etc. The maximum amount granted under this scheme is ₹10 lakhs and the interest depends upon the market rates.
Mudra Yojana Scheme For Women
This scheme has been launched by Govt. of India for individual women wanting to start small new enterprises and businesses like beauty parlours, tailoring units, tuition centres, etc, as well as a group of women wanting to start a venture together. The loan doesn’t require any collateral security and can be availed as per 3 schemes –
Shishu – loan amount is limited to ₹50,000 and can be availed by those businesses that are in their initial stages.
Kishor – loan amount ranges between ₹50,000 and ₹5 lakhs and can be availed by those who have a well-established enterprise.
Tarun – loan amount is ₹10 lakhs and can be availed by those businesses that are well established but require further funds for the purpose of expansion.
If the loan is granted, a Mudra card will be given to you which functions the same way as a credit card however the funds available are limited to 10% of the loan amount granted to you.
Learn more: Mudra Yojana Scheme For Women
Orient Mahila Vikas Yojana Scheme
This scheme is provided by Oriental Bank of Commerce to those women who hold a 51% share capital individually or jointly in a proprietary concern. No collateral security is required for loans of ₹10 lakhs up to ₹25 lakhs in case of small-scale industries and the period of repayment is 7 years. A concession on the interest rate of up to 2% is given.
Trade Related Entrepreneurship Assistance and Development
The TRADE scheme aims to empower women by providing credit to projects, conducting specific training and counselling, and eliciting information on related needs. The scheme provides for a government grant of up to 30 per cent of the total project cost as appraised by lending institutions. These institutions would finance the other 70 per cent.
Learn more: Trade Related Entrepreneurship Assistance and Development
Non-Government Funding Scheme For Women Entrepreneurs
In starting a venture, access to capital is one of the biggest hurdles women entrepreneurs face. A slew of government-initiated women-centric schemes introduced over the last few years can help bridge the gap between institutional lending and the financial needs of women entrepreneurs. However, the business landscape needs to see other avenues for the purpose of providing easy and credible access to fund women-owned businesses.
Currently, there are a few non-government platforms in India working towards fulfilling this purpose. Here are the prominent players of them.
Saha Fund is a first women-focused venture capital fund approved by the Securities and Exchange Board of India. They aim not only at investing in startups founded by women, but also where women hold senior management roles, and the ones that make products and services for women. With the aim of discovering and leveraging the untapped women talent available in the market, Saha Fund invests in companies across e-commerce, social media, mobile, cloud, analytics, education, healthcare, analytics, food tech and tech platforms.
Learn more: Saha Fund
Women Entrepreneurs India
Women Entrepreneurs India lends a helping hand to women in establishing their businesses with ideas that coincide with their abilities, interests and skills, and to upscale their existing business. Women Entrepreneur India strives to educate, train, support and motivate women entrepreneurs all over India, through innovative business ideas, startup funding avenues, marketing support and mentor connects.
Learn more: Women Entrepreneurs India
SonderConnect aims to create a pipeline of high-potential women entrepreneurs and assist them in scaling by connecting them to investors and providing access to a powerful global network. They support women in their entrepreneurial journey to become self-governing and guides them to thrive in their endeavours through our comprehensive, expert-led mentoring programs.
Learn more: SonderConnect
HerMoney Talks is India’s first financial services marketplace for women. They aim at connecting women to financial institutions and facilitate credit for women. They also connect women to financial institutions and experts and become a financial service and credit facilitator for women in India.
Learn more: HerMoneyTalks
It is a micro-lending platform for four different categories of entrepreneurs that include small and medium enterprise, personal, and women’s loans. Compared to its other loan products, Cash Suvidha for Women offers lower interest rates and less supporting documentation to help women in India to sustain their businesses. The platform has its own ‘Suvidha Score’ system to determine applicants’ creditworthiness for instant loan approval and disbursement.
Learn more: Cash Suvidha
Womentum is an international platform working in different developing nations, one of which is India. They crowdfund donations for women entrepreneurs to start businesses. They have a unique model in place wherein all funds raised are donations, and when businesses become profitable, entrepreneurs pay it forward to someone else who wishes to start a business.
Learn more: Womentum
Venture capital is the capital that investors and financial institutions invest in businesses with a long-term growth perspective. Women entrepreneurs are increasingly seeking support from this arena. The venture capital scene in India is a traditionally male-dominated area. Although the venture capitalist industry has started to include women who are venture capitalists and angel investors, the actual number of women angels and venture capitalists is still comparatively less. Women entrepreneurs face challenges on various fronts. Women investors are more likely to look beyond set cultural biases and help in fostering an enabling environment for female entrepreneurs to flourish. This women-led investor-entrepreneur equation has immense untapped potential.
The concept of crowdfunding is fast gaining ground in the country. Crowdfunding is an innovative way of accessing funds. Crowdfunding platforms are spaces for fundraisers and the crowd to interact, where small amounts can be sourced from a large number of individuals to finance one’s venture. Below are some of the noticeable platforms.
BitGiving – BitGiving is an online crowdfunding platform that helps women entrepreneurs to raise funds for their venture and giving wings to entrepreneurial ideas, creative minds.
Rug Beneath My Feet – Rug Beneath My Feet is India’s first women-centric rewards crowdfunding platform. The platform helps women entrepreneurs to get funds for their ventures and campaigns.
Peer-to-peer Lending – Peer-to-peer lending is a form of crowdfunding used to raise loans for people who need to borrow, from people who want to invest. It enables individuals to borrow and lend money without any financial institution as an intermediary and extends credit to borrowers who are unable to get it through traditional financial institutions.
Majority of the women in India are known to be dependent on informal means of credit access. They generally seek financial assistance from family, friends, acquaintances and moneylenders. Reducing dependence on these channels, particularly on the male members of the family, is needed for women to ‘start-up’ on their own, in the true sense of the term. Information regarding non-government platforms for availing funding assistance for women is difficult to reach. Avenues such as the ones listed above need to be further explored and brought to the fore.
Increasing support for women entrepreneurs from the government sector is encouraging. These government loans for women can really help tide you over a financially difficult time, but it’s important to be smart and careful with business loans in India, and know how and where to find the right investors. However, as the challenges women face in accessing institutional credit are multi-pronged, the solution to the funding fix requires a multi-pronged approach too.