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About Small Business Loan for Women

Empowering the woman workforce is important for the economic development of any country. The Government of India along with various banking institutions of the country, has introduced numerous financial schemes to help women entrepreneurs to achieve their business goals. Having a solid working capital is essential for the success of any business; be it a small-scale industry, a cottage industry or a large-scale industry.

Despite possessing superior skills for the business and the potential for running a successful enterprise, women are often discouraged by lack of funding. Hence, the Government of India has devised various financial schemes to give our women the required financial push; whether it is to setup a business from ground or to expand an existing unit, there are several schemes and loan options available.

These loans come with a variety of benefits like low interest rates, minimal documentation, nil collateral and longer repayment tenures. The loans are designed to facilitate women become financially and economically independent.

Small Business Loan For Women
Small Business Loan For Women

Eligibility

1. Loans for women entrepreneurs planning to establish a beauty parlour or similar micro units is usually offered to women between the age group of 20-60.

2. Businesses with women proprietorship, partnership firms with women as major stakeholders are also eligible to apply for this type of loan.

Loan Amount :

Loans for small or micro business units are of two types – Term loan to purchase shop, tools and equipment to set up shop, etc., or the loan could be availed as working capital loan to cater to the day-to-day business needs. For beauty parlours, loans of Rs. 25,000 up to Rs. 1 Crore are offered.

Security/Guarantee :

These loans are considered as term loans and require security or collateral as per the financial institutions’ norms. However, for loans availed under the CGTMSE scheme of the Government of India, women can avail loans of up to Rs. 1 Crore without any collateral.

Rate of Interest :

The rate of interest is similar to other term loan products of the banks or financial institution. However, discounts and concessions on the interest rate is offered for women applicants. The current rate of interest ranges between 10.00% to 14.00% across different institutions.

Apart from these features, several benefits and offers are available for women entrepreneurs, looking to establish a beauty parlour. Some of the institutions that can be approached for a small business loan are given below

1. Bharathiya Mahila Bank – Shringaar

This loan is specially designed for women planning to establish their own beauty parlour. This loan was devised in partnership with leading Salon brands like Naturals, CavinKare & Lakme Ltd. This loan is provided either as a Term Loan or a Working Capital Loan. The loan can be used for purchase/construction of the parlour premises and purchase of tools and equipment. Under the CGTMSE loan facility of the Government of India, this loan does not require any collateral for loans up to Rs. 1 crore. The current rate of interest being offered is between 10.15% - 13.65%. A concession of 0.25% on the interest rate is offered to women applicants. The repayment tenure is 7 years.

2. Stree Shakti Package by SBI

This loan is offered to women entrepreneurs who are part of the Entrepreneurship Development Programmes (EDPs) conducted by state agencies. This loan can be availed by women who have more than 50% partnership in a firm. Women entrepreneurs can avail loans up to Rs. 50 lakhs. Rate of Interest is as applicable to term loan interest rates prevailing at the bank. A concession of 0.50% is offered for loan amounts above Rs. 2 Lacs. No security required for loans up to Rs. 5 Lacs.

3. Dena Shakti Scheme

This scheme was designed for women associated with micro-credit, retail stores, small stores, agriculture and manufacturing sectors. The interest rate is also lesser by 0.25% and the loan amount offered is up to Rs. 20 Lacs for retail trade, education and housing sectors, while it is Rs. 50,000 for micro-credit.

4. Udyogini Scheme

This scheme offers low-interest rates for business loans. However, it is offered to women belonging to SC/ST category with a family income less than Rs.45,000 per annum. Loans of up to Rs. 1 lac is offered to women entrepreneurs aged between 18- 45. This scheme is primarily promoted by Punjab & Sind Bank. In recent times, many other banks including Karnataka State Women’s Development Corporation (KSWDC) is offering this scheme.

For widowed, destitute or disabled women belonging to SC/ST category, a subsidy of 30% of the loan amount, or Rs. 10,000 (whichever is lower) is given. For women belonging to the general category, a subsidy of 20% of the loan amount, or Rs.7,500 (whichever is lower) is given.

5. Cent Kalyani Scheme

This scheme was conceived by Central Bank of India, ideally for women managing SMEs or involved in agricultural activities and retail trade. Loan amount of up to Rs. 1 Crore is provided. This loan does not require any collateral or guarantor. This loan also comes with NIL processing fees.

6. PNB Mahila Udyam Nidhi Scheme

This scheme is offered by Punjab National Bank. It is exclusively offered to women business owners looking to set up a new unit or expand and upgrade an existing one. This is a great scheme if you are planning to modernize or adapt newer technologies for your existing processes. Maximum loan amount of Rs. 10 Lacs is offered. The loan must be repaid within 10 years, including the moratorium period of 5 years maximum.

7. Orient Mahila Vikas Yojana

This scheme is initiated by Oriental Bank of Commerce. It helps women with the initial capital to set up a small business. The applicant should hold 51% ownership of the business for which the loan is applied for. A loan amount of Rs.10 lacs can be availed without any security or collateral. The maximum repayment tenure is 7 years. A concession of 2% is offered on the interest rate.

8. MUDRA Yojana Scheme for Women

The Pradhan Mantri Mudra Yojana (PMMY) has developed various schemes and products aimed at supporting the development and funding needs of micro unit/entrepreneur beneficiaries. It has 3 segments signifying the stage of growth/development and the funding needs of the units –

  • Shishu: covering loans up to Rs. 50,000
  • Kishor: covering loans of Rs. 50,000 up to Rs. 5 lacs
  • Tarun: covering loans of Rs. 5 lacs up to Rs. 10 lacs

Women entrepreneurs can avail loans for their business under these schemes. Under the MUDRA scheme, women business owners can get a concession on the interest rates. These are just a few of the many financial products available in the market for women entrepreneurs specially to set up a beauty parlour. One can also approach any bank or an NBFC near them to learn more about their business loan products.

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