Entrepreneurship in India has been booming for the past couple of decades as both men and women are starting to explore various business opportunities. However, the start-up and MSME sectors remain largely dominated by the male population. Statistics suggest that the Indian entrepreneurs comprise only 14% women and the remaining are men. There are only about eight million female entrepreneurs in India and nearly 50 million male entrepreneurs. This brings a need for a sustainable boost to women entrepreneurs for promoting a healthy balance of entrepreneurship in the country.
To provide the right amount of boost to women entrepreneurs, there are several business loan schemes offered by the government today. Here, we explore the top 9 business loan options for women entrepreneurs:
- Mudra Yojana Scheme
Mudra Yojana Scheme is a Government of India scheme meant for small business units. This scheme applies to women who wish to start a small business, like beauty parlor, coaching centre, tailoring unit, etc. Under this scheme, women entrepreneurs can get loans from Rs. 50,000 up to Rs. 50 lakhs. The loan requires collateral and guarantors only in case the loan amount is beyond Rs. 10 lakhs.
There are three plans under this scheme:
- Shishu plan – loans up to Rs. 50,000 for new businesses
- Kishor plan – loans ranging from Rs. 50,000 to Rs. 5 lakhs for well-established businesses
- Tarun plan – loans ranging from Rs. 5 lakhs and Rs. 10 lakhs for business expansion
Mudra loan scheme does not directly lend to individuals and can be availed from banks and NBFCs.
- TREAD (Trade-Related Entrepreneurship Assistance and Development) scheme
The TREAD scheme is designed for women who cannot easily access bank credit facilities. The scheme provides financial assistance for business projects, training and counselling sessions. It also provides a government grant of up to 30% of the total project cost as approved by the lending institutions. These institutions finance the remaining 70%. A maximum grant of Rs. 5 lakhs per project can be availed.
The loan and grant amounts are provided through NGOs, which look after the imparting of training sessions.
- Mahila Udyam Nidhi Scheme
This scheme is offered by the Small Industries Development Bank of India (SIDBI). Mahila Udyam Nidhi scheme is designed to provide financial assistance of a maximum of Rs. 10 lakhs to women entrepreneurs for setting up new small-scale business units. The scheme also helps in upgrading and modernization of ongoing projects. The loans under this scheme are to be repaid within 10 years. Interest rates on these loans may vary as per ongoing market rates and across different banks.
- Annapurna Scheme
Annapurna Scheme is designed for women entrepreneurs who have started a food catering business or want to start one. Under this scheme, women entrepreneurs can avail of a loan of up to Rs. 50,000 for purchasing kitchen essentials, utensils, gas connections, raw materials, water filters, etc as required for the catering business.
A guarantor is required for securing this loan. Once the loan is secured, it can be repaid in 36 instalments across three years. Additionally, the interest rates under this scheme are decided as per ongoing market rates.
- Stree Shakti Package for Women Entrepreneurs
This scheme is meant for women who have majority ownership (more than 50%) in a small business. These women must be enrolled in the Entrepreneurship Development Programmes (EDP) organised by their respective state agency.
Loans under the scheme do not require security and are available at an interest rate of 11.2% onwards. The loan repayment tenure is a maximum of 36 months, including a one-month moratorium. The scheme also offers an interest concession of 0.05% on loans above Rs. 2 lakhs.
- Bhartiya Mahila Business Bank (BMB) Loan
This loan scheme is segregated into four types, namely:
- BMB Shringaar for beauty parlour/salons and spas
- BMB Annapurna Loan for food catering
- BMB SME Easy for SMEs
- BMB Parvarish for daycare centres
This scheme comes under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). It provides loans of a maximum of Rs. 20 crores for women entrepreneurs. It does not require collateral for loans up to Rs. 1 crore. The loans under this scheme must be repaid within seven years.
- Dena Shakti Scheme
The Dena Shakti Scheme offers loans up to Rs. 20 lakhs to women entrepreneurs who are involved in agriculture, manufacturing, micro-credit, retail stores, or similar small enterprises. The scheme provides loans up to Rs. 50,000 under the micro-credit category.
The rate of interest is decided as per the guidelines of Dena Bank and RBI directives. The scheme offers a concession or rebate of 25 basis points on the interest rate subject to conditions specified by Dena Bank.
- Udyogini Scheme
This scheme offers subsidised loans to aspiring women entrepreneurs who belong to rural and under-developed regions. It provides interest-free loans of up to Rs. 3 lakhs to women entrepreneurs involved in small-scale industries.
The government offers up to 30% subsidy on loans extended under this scheme. Women entrepreneurs in the age range of 25 and 65 who have a family annual income of below Rs. 1.5 lakhs are eligible for this loan scheme.
- Cent Kalyani Scheme
This scheme is offered by the Central Bank of India. It is meant for women business owners involved in manufacturing and services, such as handlooms, food processing, garment making, etc. The scheme aims to provide loans for capital expenditure on plant and machinery, equipment, daily expenses, and others.
Under this scheme, loans of a maximum of Rs. 1 crore are sanctioned with a 20% margin on collateral. The interest rates are dependent on ongoing market rates.
Women entrepreneurs can now look forward to various financial aids for starting and running their business enterprises and give equal competition to their male counterparts. Women business owners can select from these schemes as per their requirements and eligibility criteria.
Top business loan schemes for women entrepreneurs: Mudra Yojana, TREAD, Mahila Udyam Nidhi, Annapurna Scheme, Stree Shakti Package, Bhartiya Mahila Business Bank loan, Dena Shakti Scheme, Udyogini Scheme and Cent Kalyani Scheme.