India has an extremely vibrant startup ecosystem. For years together it was male-dominated, like most other industries. But now, plenty of women entrepreneurs have come forward, after ditching high-paying jobs to run their own businesses. This has been made possible due to the various kinds of loans designed specifically for those who want to become businesswomen.
When you talk about a loan for women, there are so many different kinds offered by the various financial institutions as well as by the government.
Here are 5 of the most preferred ones:
1) Small and Medium Business Finance:
Various banks and non-bank financiers offer business loans to SMEs. While most of them offer such funds to existing businesses, there is an option of startup business loans too. Particularly for women entrepreneurs, short-term loans are offered in the form of Line of Credit or LOC. Lenders verify the eligibility and set a maximum limit for credit that can be offered to the borrower. The businesswoman can then access funds up to that limit. Besides having an affordable interest rate, these loans only require the borrower to pay interest on the actual amount borrowed, not on the full limit.
2) Commercial Loans:
These loans allow medium-size woman-own businesses to access funds that can typically be use for business expansion. Commercial business loans are an instant kind of loan, that can be obtain without any security, for larger amounts as against that offer as SME loans. With minimum documentation and the option of online application, this loan for women is a great choice. Usually, commercial business loans are provided for a longer tenor than SME loans, from 3 to 5 years.
3) Personal Loans:
As a woman, if you want to start a business based out of your own home, and need funds, you can simply select one of the personal loans offered by banks or other reputed financiers. These loans are approve after verifying credit score and monthly income of the applicant; so if you have a poor score or nominal income, the amount in this loan for women will be quite low. Interestingly, you can counter a low credit score by adding a co-applicant who has a better score and apply for a higher amount. These funds can be used flexibly, as startup business loans, for expansion purposes or for routine expenses of the existing business.
4) Loan against Securities:
Women entrepreneurs can also apply for loans against securities that they own, for their home-business or new start-up. They need to show adequate documentation as proof of ownership of their investments in mutual funds, the stock market or life insurance policies, while applying for this kind of loan. Since this is a secure loan, eligibility criteria are minimal, but you may be require to visit your nearest branch for the process. You will likely be approve loans of up to 75% of your investment’s market value. In general, this kind of loan for women can be use according to your requirement.
5) Government Loans:
The government offers various kinds of business loans for women entrepreneurs. A significant startup business loan can be obtain under the Pradhan Mantri Mudra Yojana, with Shishu category offering loan amounts of Rs. 50000. Under the Kishor and Tarun categories, business women can get up to Rs. 10 lakh as finance. These loans also have a higher tenor of up to 5 years.
While there are various options at nominal interest rates, remember that government loans are likely to have greater processing times. Not that several banks as well as other financial institutions are a part of the government’s lending schemes.
