Business Loan Options for Women Entrepreneurs

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Entrepreneurship ventures or startups are certainly not considered nowadays as new business concepts in India. To impetus further growth of entrepreneurial initiatives, leading Private, as well as Public Sector Banks, NBFCs have introduced different business loan for women entrepreneurs. Few and selected lenders also offer business loans and working capital loans at concessional interest rates to promising women entrepreneurs. Take a look at the most famous loan schemes for women entrepreneurs in India offered by financial institutions.

Business Loan Schemes for Women Entrepreneurs

1. Cent Kalyani from the Central Bank of India

Central Bank of India offers business as well as startup loans for women entrepreneurs who are looking to open a new business or want to expand or alter their current one.

Key Features:

  • Range of interest rate: 8.70% p.a. – 8.95% p.a.
  • Interest Rate for Loan varies up to Rs. 10 Lakh: 8.70% p.a.
  • Interest Rate for Loan above Rs. 10 Lakh and up to Rs.100 Lakh: 8.95% p.a.
  • Purpose of the loan: To meet day-to-day requirements, like the purchasing of plant & machinery/equipment, etc., as well as the working capital expenditure.
  • Nature of the Loan: Term Loan fund-based working capital facility includes – Overdraft/ Cash Credit non-fund-based working capital – Letter of Credit, Letter of Guarantee, etc.
  • Loan Amount: Up to Rs. 100 lakhs
  • Processing Fee: Nil
  • CGTMSE Coverage: Available
  • Collateral/Security or Third Party Guarantee: Not required, as covered under the Guarantee cover of CGTMSE
  • Insurance: Comprehensive insurance of stock, machinery/equipment, etc with a bank clause
  • Women entrepreneurs who render services to rural as well as cottage industries, MSMEs, as well as women working in the farming, retailing, or government-backed firms can assist business loan

2. Mudra Loan under PMMY

Launched in 2015, Mudra under Pradhan Mantri Mudra Yojana (PMMY) is a loan scheme offered by banks for individuals, startups, and business owners, as well as women entrepreneurs across India. Under this scheme loan amounts up to Rs. 10 lakh are offered to women who want to start their own business or expand the existing one. The loan amount is commonly offered under three categories named Shishu, Kishor, and Tarun. One can also apply for this online business loan to have growth in their business. The basic features of the loan scheme offered by banks and NBFCs under the Mudra Yojana are as follows:

Key Features:

  • The Concessional Interest Rates for Women Entrepreneurs
  • Collateral-Free Business Loans:  There is no collateral or security which is required by banks or NBFCs
  • Loan Type: Term Loan or Overdraft
  • 3 Loan Categories: Shishu, Kishor, and Tarun
  • Loan Amount: There is no minimum limit and maximum up to Rs. 10 lakh
  • Repayment Tenure: it ranges up to 5 years
  • Processing Fee: ranges between nil to 0.50% of the sanctioned loan amount
  • Loans are usually for Women living in both Urban and Rural regions of India

Mudra loans are popularly offered to women to encourage women entrepreneurs and to promote the MSME sector.

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

ICICI has recently introduced no collateral business loans for Self Help Groups (SHGs) of about 10-20 women. The maximum loan amount is generally offered under this scheme which is Rs. 10 lakh with a total repayment tenure of up to 3 years.

Eligibility Criteria
  • The minimum existence of SHG should be at least 6 months
  • A group of 10-20 women is eligible to avail of funds
  • A minimum Savings/Corpus of Rs 5,000 is required
Key Features:
  • Interest Rate: Up to 21.50% p.a.
  • Purpose of Loan: Business expansion, income generation, and livelihood activities
  • Loan Amount: Up to Rs. 7.5 lakh for customers of other Banks and up to Rs. 10 lakh for ICICI Bank customers
  • Collateral-free loans
  • Repayment Tenure: Up to 36 months