Business Loan Schemes for Women Entrepreneurs: Benefits and Options

India has seen prominent strides made by women entrepreneurs in the entire business ecosystem in the past decade. Women today are not only starting their businesses more confidently but are also achieving success at par with their male counterparts. From Nykaa’s Falguni Nayar to ShopClues’s Radhika Ghai Aggarwal, women entrepreneurs have left profound imprints of their capabilities across multiple sectors. 

According to a 2022 NITI Aayog report, women account for almost 20% of the country's MSME entrepreneurs, a number that has increased significantly over the last decade. To support this trend, various business loan schemes for women entrepreneurs have been designed to be easily accessible and affordable by both government and commercial banks. 

This blog will help you discover the benefits of business loans for women entrepreneurs, the 5 most popular loan schemes, and the eligibility criteria to apply for these schemes. 

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Benefits of Readily Available Business Loans for Women Entrepreneurs 

1. No Collateral Required Options

• There are multiple loan options provided either under government schemes or by banks themselves, where a majority of women entrepreneurs can secure funding without putting their assets on the line. 
• New entrepreneurs can focus on building their businesses without the fear of losing collateral.
• Unsecured loans make financial resources more accessible to women from diverse backgrounds.
  

2. Flexible Repayment Terms and Interest Rates

• Women can choose repayment periods that suit their business models, with options typically ranging from 12 months to 5 years.
•  Competitive interest rates and concessions help keep the cost of borrowing manageable.
• Flexibility in terms allows for better financial forecasting and planning for business growth.
  

3. Streamlined Application and Disbursal Process

• A simplified application process reduces the time spent on paperwork, allowing women to focus on their businesses.
• Fast disbursal of loans helps women entrepreneurs seize business opportunities as they arise.
•  Online applications provide a more accessible and comfortable experience for women who may be new to the borrowing process.

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Top 5 Business Loans Schemes for Women Entrepreneurs in India 

Pradhan Mantri Mudra Yojana (PMMY) 

Under this scheme, the government established MUDRA, Micro Units Development and Refinancing Agency in 2015 to extend loans to MSMEs. 

• There are three types of MUDRA loan categories: Shishu Loans up to Rs 50,000 are available for startups and new companies, Kishor Loans range from Rs 50,000 to Rs 5 lakhs for businesses looking to expand, and Tarun Loans range from Rs 5 lakhs to Rs 10 lakhs for well-established companies seeking further growth.
• Loans under PMMY can be conveniently repaid in installments of up to 84 months at low interest rates without any obligation to pledge collaterals. 
• According to a PIB report, of the 44.46 crores of loans sanctioned under PMMY in 2023, Rs 30.64 crores, or about 69%, were sanctioned to women entrepreneurs. 

Eligibility Criteria 

Under PMMY, the minimum age to acquire a loan is 18, and the maximum is 55. Women must own or be the majority stakeholder in the enterprise for which the loan is being extended. 

Application Process

• Online Application:some text
  1. Visit the official PMMY website or the bank's website offering PMMY.
  2. Fill out the online application form with personal and business details.
  3. Submit necessary documents online.
  4. Receive a loan application acknowledgment number.
• Branch Application:some text
  1. Visit the nearest bank branch offering Mudra loans.
  2. Collect and fill out the application form.
  3. Submit the form along with the required documents.
  4. Meet with the bank officer for further discussion.

Required Documents

• KYC Documents: Aadhaar card, PAN card, and passport-size photographs.
• Business Registration: Business license or registration documents.
• Financial Statements: Bank statements for the last 6 months.
• Project Report: Detailed project plan outlining how the funds will be utilized.

Stand-Up India Scheme

The scheme is implemented through banks to ensure at least one woman entrepreneur per branch of participating banks receives financial assistance, especially in the non-farm sector. 

• Loans here range between Rs 10 lakhs and Rs 1 crore, including working capital and term loans. The interest rate is the lowest applicable rate, which should not exceed the bank's prime lending rate (PLR) + 3% + tenor premium. 
• The loan can be repaid over 7 years, with a maximum moratorium period of 18 months. As per RBI guidelines, the loan can be secured through a guarantee from the Credit Guarantee Fund Scheme for Stand-Up India (CGFSI)

Eligibility Criteria

To qualify for a loan under the Stand Up India scheme, the beneficiary must be over 18 years of age and must have 51% ownership of the business and its management. 

Application Process

• Online Application:some text
  1. Go to the Stand-Up India portal.
  2. Register and create an account.
  3. Fill in the application form, providing all necessary details.
  4. Upload the required documents and apply.
• Branch Application:some text
  1. Visit the designated bank branch.
  2. Obtain and complete the application form.
  3. Submit the form and supporting documents.
  4. Discuss the business idea with the bank officer.

Required Documents

• KYC Documents: Identity and address proof (Aadhaar card, voter ID, etc.).
• Business Registration: Proof of business registration.
• Financial Statements: Bank statements for the last 6 months.
• Project Report: Detailed project plan and business viability analysis.

SBI’s Stree Shakti Package 

This is a loan scheme launched by the Central Government in collaboration with SBI to provide financial assistance to women entrepreneurs.

• This scheme offers women entrepreneurs loans up to Rs 25 lakhs at concessional interest rates and unsecured loans up to Rs 5 lakhs.
• The interest is as per the prevailing interest rates for loan amounts between Rs 500000 and Rs 2 lakhs. 
• The concession rate will be 0.05% for amounts exceeding Rs 2 lakhs. In some cases, a special concession of 5% will also be granted.

Eligibility Criteria  

The applicant must be above 18 years of age and must own 51% of the business. 

Union Nari Shakti Loan

Union Bank of India offers this loan for up to Rs 10 crores, which can also be extended depending on the business requirement. Collateral might be required depending on the loan size and borrower profile. 

• For smaller loans, Union Bank may offer the loan under the CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) scheme, eliminating the need for collateral. The loan offers flexible repayment terms, with tenures ranging from 3 to 7 years, depending on the nature of the loan and the borrower’s ability to repay.

Eligibility Criteria 

Loan applicants should be women with up to 51% stake in the business and a minimum of 18 years old. 

Udyam Nidhi Scheme 

The PNB Mahila Udyam Nidhi Scheme is a financial initiative designed to empower women entrepreneurs in India by providing them with loans to establish or expand their businesses. 

• Loans under the Udyam Nidhi Scheme can be up to Rs 10 lakhs without collateral, depending on the type of business and the entrepreneur's requirements. 
• The maximum repayment period is up to 10 years, with a moratorium period of up to 5 years.
• Interest rates vary based on the project cost and can range from approximately 7.35% to 12% per annum, depending on the lending institution and the applicant's credit profile.

Eligibility Criteria 

Minimum 18 years of age and 51% business ownership. 

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Conclusion 

As women entrepreneurs gain better access to securing these loans, it would lead to business growth, innovation, and the creation of employment opportunities. In the long run, this would support broader socio-economic development, promote inclusive growth, and enhance economic resilience. To attain these objectives, the government along with various financial institutions are making startup funding affordable and accessible for women entrepreneurs.

We at Recur Club are committed to this objective by democratizing access to credit facilities that help small women entrepreneurs experience unhindered growth.

Connect with our capital experts and witness your business scaling new heights of growth. 

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