The phenomenal rise of women entrepreneurs in India is not only indicative of a progressive society but also a prosperous economy. India’s current socioeconomic fabric is highly supportive, encouraging, and favourable for budding entrepreneurs. And in a bid to improve inclusiveness in the business sector, the Central Government of India has brought forth an array of convenient business loans for women entrepreneurs.
This blog offers an overview of some of the most prominent small business loan schemes for women entrepreneurs in India.
Government Loan Schemes for Women Entrepreneurs
As more and more women entrepreneurs make their presence known in diverse business sectors, proper financial support is necessary. Finance is the lifeblood of any business, and there exists a perpetual gap regarding financing female-led MSMEs & startups in India.
The current Government of India has made things easier with tailor-made business loan schemes for women entrepreneurs. Offered as personal or business loans, many loan options are available for women wanting to build a profitable business.
Let’s take a look.
1. Mudra Loan for Women
The MUDRA (Micro Units Development& Refinancing Agency) loan scheme is a debt financing product offered by the Pradhan Mantri Mudra Yojana (PMMY). MUDRA loans for women are small business loans with attractive interest rates, flexible repayment tenure and refinancing support. The PMMY MUDRA scheme is a financial support channel for entrepreneurial initiatives by women and entitles them to receive informal finance from major banks, NBFCs, & different last-mile financiers.
There are three variations of the PMMY MUDRA loan, and they are as follows:
- Shishu Loan: Category for a loan amount below Rs. 50000.
- Kishor Loan: For loan amounts between Rs. 50000 and Rs. 5 lakhs.
- Tarun Loan: For loan amounts in the range of Rs. 5 lakhs and Rs. 10 lakhs
Key features of the PMMY MUDRA scheme are:
- Zero processing fees for the Shishu and Kishor loan categories and 0.50% processing fees plus taxes for the Tarun category
- All startups & MSMEs in the manufacturing, trading and services sector are eligible
- Zero collateral necessary
- Women entrepreneurs can avail of the loan amount up to Rs. 10 lakhs
- Repayment tenures can extend up to 5 years
- All female-led businesses in the retail trade, services & manufacturing sectors across rural, semi-rural, semi-urban, and urban regions are eligible.
2. Annapurna Scheme
Under the Annapurna business loan scheme, female entrepreneurs can avail of collateral free loans of up to Rs. 50000. This micro-credit scheme is best suited for female go-getters in the catering and agricultural sectors. It can buy equipment, utensils, containers, agricultural instruments, fertilisers, and the like. Borrowers do not need to repay anything in the first month after loan approval. Offered by the State Bank of Mysore and the Bharatiya Mahila Bank, the repayment tenure is 36 months. Interest rates are determined by the financing institution and the current market rates.
The drawbacks of the Annapurna Scheme are its maximum loan amount, the necessity of a guarantor & the pledging of business assets as collateral in certain cases.
3. Stree Shakti Yojana
The State Bank of India offers the Stree Shakti Yojana credit facilities of up to Rs. 5 lakhs to self-employed women and female-led enterprises. The scheme offers loans with certain concessions & features such as no security of loans up to Rs. 5 lakhs, interest rate concession of 0.05 per cent on the loan amount for loans above Rs. 2 lakhs, and availability across all State Banks branches.
Two major requirements or constraints of this business loan scheme are that applicants must possess a majority stake in the business and the business itself needs to be registered with the state’s Entrepreneurship Development Programmes.
4. Dena Shakti Scheme
The Dena Shakti Scheme is one of the best loan schemes for women entrepreneurs in the agricultural, manufacturing, micro-credit, and retail sectors and small scale industries.
Business loan amounts of up to Rs. 20 lakhs can be availed at 0.25 concession to the interest rate. The availability of this scheme is limited to medium and small enterprises. The Dena Shakti Scheme also offers small loans of up to Rs. 50000 in the microcredit category.
5. Bhartiya Mahila Bank Business Loan
The Bharatiya Mahila Bank of India merged with the State Bank of India and introduced this loan scheme for aspiring women entrepreneurs in the MSME and micro-credit sectors.
The business loan scheme is best suited for meeting working capital requirements, buying essential equipment, expanding, etc. Interest rates start from 10.5%, and businesses in the manufacturing sector can avail of loan amounts up to Rs. 1 crore and up to Rs. 5 crore in the retail and service sectors. The maximum loan amount can go up to Rs. 20 crores, and there’s no need for collateral security for loans up to Rs. 1 crore.
There are different offerings under the Bharatiya Mahila Bank Business loan scheme.
- Shringaar: The Shringaar loan scheme provides collateral-free debt financing facilities for homemakers and female owners of small businesses looking to meet basic financial requirements for their businesses.
- Parvarish: With an aim to provide financial independence to women entrepreneurs looking to set up daycare facilities or creches, this subcategory offers loans of up to Rs. 1 crore. The CGTMSE provides coverage for these loans.
- Annapurna: The Annapurna category is designed to support women entrepreneurs in the food and catering industry & allied activities. Loans of up to Rs. 5 crores can be availed without collateral security.
6. Mahila Udyam Nidhi Yojana
The Mahila Udyam Nidhi Scheme is a business loan scheme for women entrepreneurs brought forth by the Punjab National Bank and SIDBI.
One of the most well-structured and flexible schemes among the various business loan schemes for women available, it offers quick and hassle-free financing to MSMEs in any business domain. Women entrepreneurs can avail of loan amounts up to Rs. 10 lakhs to meet their working capital needs, make essential purchases, expansion.
The maximum repayment tenure is 10 years, while interest rates depend upon current market rates.
7. Orient Mahila Vikas Yojana Scheme
The Oriental Bank of Commerce offers the Oriental Mahila Vikas Yojana Scheme to women entrepreneurs with individual ownership of more than 50% equity capital in a proprietorship or joint venture.
Loans between Rs. 10 lakhs and Rs. 25 lakhs can be availed with minimum documentation and at a 2% concession on the interest rates. The repayment period is seven years.
8. Cent Kalyani Scheme
The Central Bank of India introduced the Cent Kalyani Scheme for women entrepreneurs and female-led small businesses in the cottage, farming, trade, retail, and MSME sectors.
Ideal as seed funding for startups, this loan scheme offers collateral-free financial support with zero processing fee, no need for any guarantors, coverage by the CGTMSE, loan insurance options, varied options such as line of credit, overdraft, term loans, working capital loans, etc.
The maximum amount is Rs 1 crore, with interest rates ranging between 7.35 %to 8%
9. Udyogini Scheme
The Udyogini Scheme is a loan scheme developed by the Women Development Corporation of the Government of India. It encourages women entrepreneurs from backward classes and illiterate women to turn their aspiring business ideas into reality.
The scheme provides mentorship & upskilling programmes and offers financial support to new ventures in the cottage industries, retail stores & retail traders, etc., from various banks in rural regions.
- Age Criteria: 18 to 65 years
- Credit history: Zero loan defaults
- Eligible Businesses: Self-employed individuals, sole proprietorships, joint ventures, LLPs, and partnership firms in the retail, services, manufacturing, agriculture, and MSME sectors
- Minimum Turnover: Determined by the lender
- Loan Amount: There’s no minimum limit to the loan amount, and the maximum amount can go up to Rs. 10 lakhs, & can go even further.
- Security/Guarantee: Zero collateral is necessary in the majority of cases
- Rate of Interest: Attractive interest rates with concessions & discounts are offered by many lenders
Benefits of Getting Yubi’s Loans for Women for Business
Yubi is India’s leading digital corporate debt solutions platform. We cater across the spectrum, enabling businesses of all natures to find the right financial support. Yubi employs advanced technologies to connect businesses with financiers and offers a singular platform for seamless onboarding, quick approval, hassle-free disbursement, & real monitoring and profile management.
- Unbiased loan process: Yubi serves women entrepreneurs across India without bias or stigma. You will find the right business loan schemes if you meet the eligibility criteria.
- Quick disbursement: An API-backed infrastructure makes approval and disbursal near instant. Get money in your account within a day from leading commercial banks & NBFCs.
- Collateral-free: Avail of a wide array of collateral-free business loan schemes for women entrepreneurs.
- Reduce cash flow risks: Opt for a loan with any central bank, private bank, or NBFC, to stabilise your business’s cash flows and reduce liquidity risks.
- Get funds on the go: Yubi offers five times faster transactions and easy access to diverse debt instruments with a single click through Yubi Automate. Get your business funds on the go from leading banking partners and more than 750 lenders under one roof.
- Repayment flexibility: Avail of a wide variety of debt financing products with flexible repayment tenures ranging from 2 months to up to seven years.
What loans are available for women to start a business?
Business loans of different kinds, such as MSME loans, term loans, working capital loans, line of credits, overdrafts, etc., are available for women entrepreneurs across the majority of public & private banks, NBFCs, rural regional banks, and micro-financing institutions across India.
What loan options are there to start a small business for women?
Small business loans, micro-financing loans and micro credits are major loan options for women entrepreneurs that can help them meet different business requirements.
What is the best possible loan for a woman entrepreneur?
The best possible loan for women entrepreneurs is undoubtedly the Cent Kalyani Scheme, thanks to CGTMSE coverage, varied loan options, low-interest rates, zero collateral, and high maximum loan amount value.
What are the government loans for women to start a business?
The MUDRA loan scheme under PMMY, SIDBI loans, PSB Loans In 59 Minutes, and the Startup India & Stand-Up India loan schemes are prominent government-backed schemes for aspiring women entrepreneurs.