Business loan schemes for women entrepreneurs in India

If the names Falguni Nayar (Nykaa), Shradha Sharma (YourStory Media), Suchi Mukherjee (Limeroad), and Vani Kola (Kalaari Capital) sounds familiar to you, then you already know that women entrepreneurship in India is on an upsurge. More and more confident women are taking up entrepreneurship, causing banks and NBFCs to offer business loans for women entrepreneurs to start and grow their business.

The government is also actively encouraging women to start new businesses and have announced special government loan schemes for female entrepreneurs. There are schemes like the Udyogini Yojana designed exclusively to encourage women entrepreneurship. Additionally, with MSME Udyam registration, there are special subsidies, loans, and incentives available. The number of women-owned MSME businesses have also witnessed a steady rise in the last few years, with almost 18% of MSMEs registered on the Udyam portal owned by women (as of August, 2022).

On that note, let us take a close look at small business loans for women in India offered by the government and public and private banks and NBFCs.

Business loan schemes for women entrepreneurs in India in 2023

In general, there are several business loans for Indian MSMEs offered by the government and private financial institutions. Women entrepreneurs can avail all these loans e.g., working capital loans, invoice financing, equipment finance, term loans, etc. In addition to that, there are MSME loans for women that have special interest rates, eligibility, and features, for female businesswomen. Loans for starting a new business is not just being availed in the cities but has also encouraged rural employment. Let us take a close look at the different business loan schemes for women in India.

Government loan schemes for women entrepreneurs

• Annapurna scheme
• Mudra Loan for Women
• Stree Shakti Yojana
• Stand-up India scheme
• Pradhan Mantri Rozgar Yojana
• Dena Shakti Scheme

Annapurna scheme

As can be guessed from the name of the scheme, the Annapurna Yojana scheme is a government loan scheme for women entrepreneurs in the food and catering business. A loan amount of up to ₹50,000 can be provided as business loan to be repaid in 36 months instalments (no EMI in the 1^st month). This loan can be used for buying kitchen utensils, chopping and grinding machines, raw material, tiffin carriers, or any other required in the food and catering business. This loan is mainly offered as a start-up business loan for women in India to enable them to have access to basic capital and infrastructure to start their businesses from home, especially those in semi—rural areas.

• Type of business: Women entrepreneurs in Food and Catering business
• Loan amount: up to ₹50,000
• EMI: To be repaid in 36 months (no EMI for 1^st month)
• Eligibility: Between 18-60 years (collateral/guarantor required)

Also read: Jan Samarth portal: Loan details, registration, login, how to apply

Mudra Loan for Women (under PMMY)

One of the most popular forms of business loans in India, the Pradhan Mantri MUDRA Yojana scheme also applies to women entrepreneurs. In this loan scheme, women entrepreneurs can avail loans between ₹50,000 to ₹10 lakhs at discounted interest rates. This is usually a term loan (repayment up to 7 years) that can be used for business expansion, meeting working capital needs, buying equipment and machinery, and commercial vehicle loan.

The Prime Ministers loan scheme for ladies comes in three categories:

• Shishu – For loans up to ₹50,000
• Kishor – For loans between ₹50,000 and ₹ 5 lakhs
• Tarun – For loans between ₹5 – ₹10 lakhs

As a woman entrepreneur, if you have a business plan ready for the services sector, manufacturing, or trading sector, you can apply for the MUDRA loans from banks and NBFC (e.g., apply for SBI e-Mudra loans). You will need the common documents required for business loan application for the same.

Note: For loan amount exceeding ₹10 lakhs (up to ₹50 lakh) guarantor and collateral may be required. Check with the bank on recent details, interest rates, and terms before applying for the MUDRA loan.

Stree Shakti Yojana

This is a unique loan scheme for women entrepreneurs by SBI (State Bank of India), to empower women in manufacturing, retail, cottage industry, textile, or service sector to access financial aid at subsidised rates. To avail loans under the Stree Shakti Package, women need to fulfil two criteria:

• They must be enrolled under the Entrepreneurship Development Programme (EDP) organised by the respective state agencies
• They must have majority ownership of over 50% in a small business

The loan availed can be requires no collateral as security and can be repaid over a period of 3 years (36 months). Also, if the loan amount exceeds ₹2 lakhs, an addition concession of 0.05% can be availed on the interest rate.

(Also read: SBI business loans)

Stand-up India scheme

This is another example of government financial support for women entrepreneurs. Under the Stand-up India scheme, bank loans between ₹10 lakhs to ₹1 crore can be offered to at least one SC/ST borrower and at least one woman entrepreneur (at least 18 years) per bank branch every year. Collateral is required to borrow the loan and the repayment tenure can extend up to 7 years.

The initiative is expected to encourage entrepreneurship and support the right applicant with the required funds to get started.

The loan amount borrowed must be used for a greenfield enterprise. The borrower must also be majority shareholder in the business with at least 51% shares.

The initiative will be led by SIBDI, along with the involvement of other institutions from specific sectors and DICCI. To begin with, SIDBI will be allotted a sum of ₹10,000 crores for the lending process.

Unlike basic eligibility criteria for business loans, these loans have special requirements. It is recommended therefore to understand each of the loan scheme requirements before applying. Alternatively, you can approach banks and NBFC for general business loans for your MSME.

Pradhan Mantri Rozgar Yojana (PMRY)

‘Rozgar’ meaning employment or earning opportunities. This loan scheme for women was designed to enable women to be financially independent through self-employment and creating employment for skilled people at work.

Under the PMRY scheme, a loan amount of ₹2 lakhs (for business) and ₹5 lakhs (for service) can be availed by women in rural and urban areas. The repayment tenure can be extended up to 7 years.

This is one of the oldest schemes launched by the government, and over the years has undergone several updates in terms of the loan amount sanctioned, tenure, and eligibility.

Dena Shakti Scheme

As can be guessed from the name, the loan was launched by Dena Bank. Under this loan scheme, women entrepreneurs can avail loans of up to ₹20 lakhs. Also, under the micro-credit category women entrepreneurs can avail credit facility of up to ₹50,000.

An additional interest rate concession of 0.25% is also offered. This loan scheme is suitable for female entrepreneurs from manufacturing, agriculture, small businesses, and more.

Women entrepreneurship loans offered by banks and financial institutions

The list of business loans to women to start a new business is huge. As more women entrepreneurs are trying their hands in business, several banks also offer schemes to enable self-employment and empower women. Some of the worthy mentions include:

• Orient Mahila Vikas Yojana Scheme: Offered by Oriental Bank of Commerce for women entrepreneurs (with 51% stakes) to avail loans between ₹10 to ₹25 lakhs
• Cent Kalyani Scheme: Offered by the Central Bank of India, this loan scheme offers loans up to ₹1 lakhs without collateral
• Self-Help Group-Bank Linkage Programme (SBLP): Offered by ICICI Bank, this scheme offers financial aid of up to ₹10 lakhs to self-help groups of 10-20 women for livelihood activities
• Shakti Scheme: Offered by Bank of Baroda this scheme offers MSME loans to female entrepreneurs of up to ₹20 lakhs
• Mahila Udyam Nidhi Scheme: Launched by the Punjab National Bank, this loan scheme aims to enable small businesses to upgrade themselves technologically with loans up to ₹10 lakh

As can be understood, the business loan interest rate depends as per RBI guidelines, market rates, and other factors. As a borrower, it is recommended to check with the bank offering the loan on current rates and other guidelines.

How to get a business loan for women

In the past, it has been difficult for women to borrow funds from banks and NBFCs to start their business. Today, with the introduction of numerous loan schemes there is a surge in the number of women entrepreneurs. Not surprisingly the number and types of business loans for women have also grown considerably.

The process to apply for a women entrepreneurship loan remains the same as any other:

• Visit the bank/NBFC branch or check details online (also for government loans)
• Read the loan documents in detail and identify the right business loan type
• Speak to a relationship manager or customer support agent for further clarity
• Apply for the business loan online/offline and attach all requested documents (e.g., KYC, ITR certificate, business proof, financial statement, photograph, etc.)
• Wait to hear from the bank on the loan status (approved/denied)

If the loan is approved, you will receive communications and the loan amount will be disbursed into your account with all relevant information.

(This article was originally published in Feb, 2023 and updated in June 2023 for relevancy)