Small Business Loans for Women

Best Business Loan Schemes for Women Entrepreneurs

1.Cent Kalyani from the Central Bank of India

The Central Bank of India offers the Cent Kalyani Scheme for female-led start-ups and small businesses in the rural & cottage industry, farming, trade retail, and MSME sectors.

This scheme is specifically designed for women entrepreneurs and can act as seed funding for kick-starting & expanding businesses. The Cent Kalyani scheme offers collateral-free business loans for women with zero processing fees and no need for any guarantors.

The key features of this loan scheme are as follows.

• Available loan options are cash credit, letter of credit, term loans, working capital loans, overdraft, cash credit, letter of guarantee, etc.
• No need for any collateral or third-party guarantee
• Risk coverage by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGFTMSE)
• Interest rates range between 7.35% to 8% per annum (7.35% for loans up to Rs. 10 lakhs, 7.65% to 8% for loans above Rs. 10 lakhs)
• The maximum loan amount to be availed is Rs. 1 crore
• Additional insurance options for stocks, machinery, equipment, etc.
• Women entrepreneurs and government-backed firms in the cottage, farming, retailing, and MSMEs are eligible.

2.Mudra Loan under PMMY

The MUDRA(Micro Units Development & Refinancing Agency) scheme under the Pradhan Mantri Mudra Yojna is another prominent avenue for obtaining a small business loan for women entrepreneurs.

Common partnership firms include public sector commercial banks, non-banking financial institutions, micro-financing institutions, regional rural banks, and cooperative banks. Under the MUDRA loan scheme, women business owners can borrow upto Rs. 10 lakhs to build or expand. There are three variations or categories of this scheme, namely, Shishu (for loan amounts up to Rs. 50000), Kishor (for loans between Rs. 500001 and Rs 5 lakhs), and Tarun (amounts from Rs. 5 lakhs up to Rs. 10 lakhs).

Key features of this loan scheme include:

• Zero processing fees for the Shishu and Kishor categories; 0.50% plus taxes for the Tarun category
• Businesses in the manufacturing, trading and services sector are eligible
• No need for any collateral
• Maximum loan amount up to Rs. 10 lakhs
• Repayment tenures of up to 5 years
• Female-led businesses in both rural and urban regions are eligible.

3.ICICI Bank – Self Help Group-Bank Linkage Programme (SBLP)

The Self-Help Group Bank Linkage program is the ICICI bank’s Agriculture & Rural Branch initiative. It helps self-help groups in rural regions engaged in micro & small-scale industries such as animal rearing, handicrafts, zari work, tailoring, cottage industries, NGOs, etc.

Self-help groups are collectives of individuals in rural regions who do not have formal access to banking institutions. Members of these groups rely upon each other and friends & family for financing support. The Self-Help Group Bank Linkage Program by ICICI assists these groups by linking with NGOs known as Self-Help Promoting Institutions. The banks work with these NGOs to determine the creditworthiness, record keeping, bookkeeping practices, rotation of funds, and other crucial parameters to assess financial health & repayment capabilities.

• Self-help groups must have been in existence for at least 6 months.
• Groups of 10-20 women are eligible.
• The group/micro-enterprise must possess a minimum savings of Rs 5,000.
• There must be an acceptable level of financial, working, and administrative discipline in the operations of the SHG.
• The ICICI bank offers a maximum loan of up to Rs. 10 lakhs.
• No need for any security or collateral
• The maximum repayment tenure is of 3 years
• Interest rates range between 7% and 21.5%, with a mean rate of 14.6%
• Zero prepayment charges
• Processing fee applicable if (the total sanctioned amount / the number of members in the SHG) is more than Rs. 25000. The rate charged is up to 2% of the sanctioned loan amount.
• Necessary documents include identity of proof of the SHG, address proof of the business, identity & address proof of the applicant, recommendation letter from the block development officer or relevant authority, and signed agreement by all members of the self-help group regarding availing unsecured business loans.

4.Mahila Udyam Nidhi Scheme – Features(PNB)

The Mahila Udyam Nidhi Scheme is an initiative by Punjab National Bank.

This business loan scheme for female entrepreneurs aims to support generally small businesses in the MSME sector by providing quick & hassle-free business loans for working capital, meeting cash flow requirements, or meeting equity gaps.

The Mahila Udyam Nidhi Scheme supports small-scale industries run by women, such as beauty parlours, daycare centres, etc. Working capital loan, upgradation, expansion, modernisation of existing projects, equipment purchase, etc.– this business loan scheme helps women entrepreneurs expand and succeed in their sectors.

The maximum loan amount dispersed is Rs. 10 lakhs, while the maximum loan tenure offered by this scheme is 10 years.

5.Stand-Up India

Stand Up India scheme is part of the Indian Government’s Start-up India initiative. The scheme offers business loans for women entrepreneurs in manufacturing, trading, and services. The loan applicant must possess at least 51% of the shareholding and controlling stake for enterprises run by an association.

• Women entrepreneurs above 18 years of age can apply for small business loans.
• Small business loans offered under the Stand-Up India scheme are only available for greenfield projects. Such projects are first-time business endeavours by women applicants in applicable sectors.
• The borrower must have a clean credit history and not be in default at any bank or financial institution.

6.Shakti Scheme from Bank of Baroda (BOB)

This small business loan offering by the Bank of Baroda lends financing support to any women-led small established business. Under this scheme, BOB offers MSME loans to businesses across numerous sectors, including agriculture & associated activities, retail trading, microcredit institutions, education, housing, direct & indirect financing MSMEs, and small and medium businesses in the manufacturing & services sector.

Only women entrepreneurs are eligible under this scheme. The maximum loan amount dispensed is Rs. 50 lakhs through the ceiling amount depends upon the borrowing business’s sector. Zero processing fee and zero collateral, along with flexible repayment tenure, convenient interest rates, and minimal documentation, make Bank of Baroda’s Shakti Scheme an excellent choice for women business owners.

7.KBL Mahila Udyog Loan from Karnataka Bank 

Bought to you by the Karnataka Bank, the KBL Mahila Udyog Loan offers small business loans to women entrepreneurs to meet business credit requirements.

Key features of the loan scheme are as follows:

• Eligible applicants include women self-help groups, businesses led by female entrepreneurs, and firms where at least 51% of shareholding & controlling stake lies with a woman entrepreneur.
• Working capital loan amount up to Rs. 2 lakhs; term loan & promissory notes of up to Rs. 10 lakhs.
• Repayment tenure varies between 12 months and 12 months per the loan product.
• CGTMSE coverage is available where applicable.
• The rate of interest is decided upon by the bank as per the loan amount, business creditworthiness, and other key factors.

How to Apply for a Small Business Loan for Women

There are multiple ways for a small business loan for women.

• Applicants can visit the branches of lending institutions to apply in person.
• They can go online and apply through the bank’s official website, & if they are opting for government-supported loan schemes, they can apply via respective websites.
• Women entrepreneurs can also apply for varied small business loan schemes from more than 750+ major banks, small finance banks, NBFCs, and financing institutions at Yubi, India’s leading digital corporate debt & investment management platform.