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10Oct2016
business-loan

How To Get Business Loans For A Woman Owned Business In India

The number of women involved in economical activities in India has increased tremendously in last couple of decades hailing to the women empowerment. To keep up with the pace, government and banks have devised many schemes for hassle-free loan issuance to women entrepreneurs.

Banks are providing loans at lower interest rates and the government has offered many subsidies to tag along with it. Starting from housing to education and even for setting up of any MSME, there is a scheme for everything.

All of these may sound all easy and interesting, but practically availing them becomes a tiresome job which most women pass by. They tend to go to the local lenders or to some private financing and end up entangled in the web of problems.

In this article, we have showcased some government and bank loan schemes and facilities provided to women-owned businesses in India.

FUNDING FOR WOMAN ENTREPRENEURS AND GOVERNMENTAL SCHEMES

On 8th April 2015, the Prime Minister of India, Shri Narendra Modi launched the very ambitious Mudra Yojana Scheme for Women. This scheme has special provisions for women entrepreneurs with the basic idea of “Funding the Unfunded”.

This scheme has easy loan dispersal for woman who wants to set up beauty parlors, tailoring units, tuition centers and various other ventures. And all these loans are collateral free!

How to Avail Mudra Loan?

Grants for women starting a business are now easily available under this scheme. Being collateral free funding, this scheme comes as a great relief to the woman aspirants.

Even procedure to avail the loan is quite simple. You have to contact the local financial institution of your respective region and they will guide you through. Here is a list of financial institutions whom you can contact:

  • Scheduled Commercial Banks (Public/Private)
  • Regional Rural Banks
  • Scheduled Urban Co-operative Banks
  • State Co-operative Banks
  • Micro Financial Institutions (such as Societies and Trusts)

There will be a verification of few formalities to follow up and the verified female candidate then will receive a Mudra Card. This Mudra card is a credit system with which you can withdraw credit up to INR 10,000 at a time as business grants for women.

In addition to this facility, grants for women can also be availed under the Sishu, Kishor and Tarun schemes as well. The number of women benefitted under these schemes are expected to double or even tripled in the coming year. Government loans for women in India were never this easy.

HOW TO GET BANK FUNDING FOR A WOMAN-OWNED BUSINESS IN INDIA?

Depending upon the business you want to set up, many governmental financial institutions have customized schemes for different purposes. SIDBI has always been a supportive structure for people involved and interested in MSME sector, and it is especially liberal for women.

Oriental Bank of Commerce Schemes 

To encourage women in building up small business setups and use their skills, SIDBI has big and small business funding. For small businesses such as setting up of Beauty Parlors, Boutiques, Saloons and Tailoring, a scheme, Oriental Bank of Commerce (OBC) offers a scheme that gives up to 10 lakh for furniture, equipments, working capital and day to day expenses of business.

There is another Scheme for Professional & Self Employed Women by OBC for purchasing of fixed assets and other working capital needs. The maximum loan limit is 5 lakh with Working Capital limit of 1 lakh.

Punjab and Sind Bank Udyogini Scheme

This is one of the best ways to avail grants for women business owners. This P&S Bank Udyogini Scheme offers easy loan access on liberal terms and exclusive credit facility for direct agriculture activities. It also offers loan for tiny SSI sector, business enterprises, retail traders etc.

It can be availed by an individual women or a group of women if they own not less than 51% of share capital. No collateral is required to avail loan under this scheme but just the hypothecation of assets bought with that fund.

Annapurna Scheme

This scheme for financing Women for establishing Food Catering Units from State Bank of Mysore (now merged with State Bank of India) is available for individuals as well as for partnership firms.

The maximum credit limit is Rs 50,000 with 50% limit for Working Capital portion. It is also a collateral free credit scheme with the security being hypothecation of assets funded out of the bank loan.

Stree Shakti Package

State Bank of Hyderabad (now merged with SBI) offers this Stree Shakti Package to any individual or partnership firm owned by women entrepreneurs.

The scheme aims at developing entrepreneurship among women by providing loan at concessional rate and other additional facilities to trained women entrepreneurs.

There is no maximum limit for loan on this scheme; it is supposed to be customized on depending on the purpose. There is no collateral required for loans up to 10 lakh and above that you need to give collateral of 40%-50%.

Akshaya Mahila Arthik Sahay Yojana

The Akshaya Mahila Arthik Sahay Yojna scheme by Bank of Baroda, is aimed at women involved in/setting up of retail trade, village or cottage/small scale industries and allied agriculture activities. It has a fixed rate of interests at reasonable terms and quite simple application procedure.

Dena Shakti Scheme

The Dena Shakti Scheme from Dena Bank has been modified to increase the outreach of the program by including many additional activities and sectors that were not covered before. The sectors are covered on the basis of priority sector and it includes the following sectors:

  • Allied agriculture activities
  • MSME for manufacturing and services industry
  • Retail trade
  • Micro credit
  • Housing
  • Education

The quantum of loans for all the sectors is in accordance with the directives of RBI for priority sector lending; such as 20 lakh for retail trading, 20 lakh for education and housing and Rs 50,000 under micro-credit.

It has been decades that women were encouraged to increase their involvement in economic sector but it has so far been in vain. Anything done this far only marginally helped women to stand up.

But, since last few financial years, the government as well as RBI has been keen to walk the talk. These schemes are facilities are already showing results and are about to bring a revolutionary change in the way system works.

For further help and first hand guidance, women can visit any nearby financial institution and they will be happy to help you out. You can also go through the website of MSME sector of government of India, SIDBI and RBI for the special schemes. You can even file grievances directly to the PMO.

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One thought on “How To Get Business Loans For A Woman Owned Business In India

  1. Useful information regarding various government and bank loan schemes and facilities provided to women entrepreneurs in India.

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