Small Business Loans for Women in India

small business loan for women

In the past few years, women entrepreneurs have taken the world up by a storm. Globally, 1 in 3 businesses, whether small, medium, or large, is now owned by women. But previously, it was difficult to get small business loans for women in India. Financial support from banks was difficult due to the severe lending standards and the thought of higher defaults.

However, now banks, lending institutions, and even the government are more willing to provide business loans for women. Here’s everything you need to know about getting a small business loan for women to start your own business:

What are Small Business Loans for Women?

Small business loans for women are offered by banks and financial institutions to help women set up their businesses and increase revenue. These are generally harder to get than standard personal loans, as most banks see business loans for women as part of a broader effort to overcome barriers to success. These barriers include concepts such as cultural stereotypes, discrimination in the lending sector, and lack of access to financing. But there has been a shift in perspective in the last few years. In fact, India now has 13.5 –15.7 million women-owned businesses that provide direct employment to 22–27 million people. Also, based on the study by Boston Consulting Group, start-ups founded or co-founded by women generate 10% more cumulative revenue over a five-year period.

Why Small Business Loans are Important?

small business loan for women in india

Providing women with access to small business loans means helping women entrepreneurs to take the next step in their business journey. The biggest obstacle that women-owned businesses face is a lack of financing. Unfortunately, our country still runs on the patriarchal concept. So, women-owned businesses are not given the same benefits or importance as their male-run counterparts. In this situation, getting small business loans for women helps remove that doubt and helps the entrepreneur get the business started.    

How to Get a Small Business Loan for Women?

If you are planning on getting small business loans, the process is similar to applying for a business loan for any other purpose. You will need to get your financial information together and then submit your documents to a lender. Once the lender reviews your application, they will determine if you qualify for a loan or not.

You will also need to provide documents to show your ability to repay the loan. This will build trust, especially when you plan to receive loans from the lender.

Things to Keep in Mind When Applying for a Business Loan

Here are a few things to keep in mind when applying for small business loans for women:

  1. Be Active: Start looking into your business finances, profit/loss, and credit/debit before you apply for a loan. You can do this by tracking your expenses and revenue. But, at the same time, do not overanalyze. Just make sure you document where your money is coming from and where you are spending it.
  2. Keep all details clear and concise: When you are providing documents to the lender, be clear and concise with your information. Do not overshare or over-explain, as this may lead to confusion.
  3. Communicate all details: If you have any questions about the loans, then communicate them with the lender as soon as possible. Do not stay in doubt, especially when getting small business loans.
  4. Keep following up: Your business needs to get the loan. So, if you do not receive any answers after a few days, connect with your lender again. Do not hesitate to ask even if your loan gets rejected. Your lender may be able to guide you in the next step.

What Government Schemes are Available?

Here are some government schemes available to get a business loan for women entrepreneurs:

  1. Bharatiya Mahila Bank Business Loan: Implemented by BHB or Bhartiya Mahila Bank, this public sector undertaking offers women entrepreneurs loans up to Rs. 20 crores. Some loan schemes include – Shringaar, Annapurna, and Parvarish
  2. Stree Shakti Yojana: This unique scheme supports women with certain concessions. They are:
    • Women who have majority ownership can apply
    • Must be enrolled under the Entrepreneurship Development Program (EDP)
    • Interest concession of 0.05% on more than 2 lakhs loans
  3. Mahila Udyam Nidhi Yojana: Offered by Small Industries Development Bank of India (SIDBI) and Punjab National Bank, women entrepreneurs can set up small ventures with loans up to Rs. 10 lakhs to be paid in 10 years.
  4. Dena Shakti Scheme: Under the Dena Shakti Scheme, women entrepreneurs can get loans up to Rs. 20 lakhs for small enterprises, micro-credit, agriculture, retail stores, and manufacturing. The scheme also offers concessions of 0.25% on interest rates.

Which Banks Offer the Best Small Business Loans for Women?

If you are looking for bank loans, here are the top banks that offer business loans for women.

Bank NameSchemeInterest RateLoan AmountTenure for Repayment
Central Bank of IndiaCent Kalyani7.35% – 7.60%Upto Rs.1 crore 
Punjab National BankMahila Udyam Nidhi schemeDepending on the project costUpto Rs. 10 lakhsUpto 5 years
MudraPradhan Mantri Mudra YojanaLinked to MCLRUpto Rs. 10 lakhsUpto 5 years
Bank of BarodaShakti SchemeDiscretion of bankUpto Rs. 20 lakhsDiscretion of bank

What Documents are Required for Small Business Loans?

The basic criteria for small business loans for women depend on how much stake the woman holds in the business. But some documents are required:

Application formFilled and signed
KYC documentsProof of business entity, partnership deeds, incorporation certificate, Articles of Association
FinancialProjected turnover and performance of the current year Tax audit reports, profit and loss reports, balance sheets, audited and provisional financials, VAT returns, etc.
Bank statementsFor the last 6 months
PhotographsApplicant and co-applicants’ passport-size photos
PAN cardPartners/directors/proprietorsBusiness Entity
Address ProofBusiness Entity Partners/proprietors/directors

How to Apply for Small Business Loan for Women?

There are multiple banks and government schemes for women if you are planning on getting small business loans. When thinking about ‘how to get a small business loan for women?’ the process is fairly simple:

  1. Apply for the loan by visiting the website of the bank or government organization
  2. Submit the form and the required documents as mentioned on the website
  3. Once the bank reviews the documents and approves, the loan is dispersed within 3 days

Business Loan for Women Entrepreneurs

Small business loans for women are curated especially for the upcoming women entrepreneurs. These loans have been created to support women and their endeavours, especially when entering the world of business. Banks and financial institutions are now realizing that women are better candidates for loans because they are less likely to be late on repayment of the loan. So, when trying to apply for a business loan, remember to keep all your documents ready and have faith in yourself and your business plan.  

FAQ about small business loans for women

1. What could the EMI for the small business loan be?

The EMI will depend on the amount of loan taken, the interest charged by the lender, and the repayment tenure chose. If you want to know the EMI amount before you apply, use an EMI calculator to check.

2. What security do I have to provide to avail of the loan?

In the case of small loans, it is not necessary to provide any security. But if you do, it helps reduce interest rates and improve your loan amount.

3. I have a business with my husband. Can I apply for a small business loan to extend it?

Yes, you can apply for one. However, you need to own 51% stakes in the business.

4. I want to open a boutique/salon. Am I eligible for a small business loan?

Under the Pradhan Mantri Mudra Yojana, you can get small business loans for women. Any activity that results in the generation of income is eligible for small business loans.

5. Can I get the Mudra loan from any bank?

Yes, all RRBs, small financial banks, commercial banks, financial institutions, and NBFCs offer loans under the Mudra scheme.

Sakshi Jadhav

I have fine tuned my writing skills, communication skills, research skills, computer applications skills specific to the industry, and my administrative abilities. I am highly professional and have a head for hard work and writing.

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