Best business loan schemes for women in India: Top 5 options to consider | Mint

In India, the number of women-led firms has risen sharply in recent years, reflecting the impressive contribution of women to economic progress. The government has introduced various financial schemes specifically for women to support and encourage women entrepreneurs. 

Let’s discuss some of these prominent schemes and their unique features.

Understanding Personal Loans

A personal loan is a type of loan provided by banks, credit unions, and online lenders. These loans are typically issued based on the applicant’s income, creditworthiness, and other factors, unlike secured loans, which require collateral. Personal loans offer the flexibility to use the funds for various purposes, such as paying off debt, covering medical expenses, renovating homes, or purchasing major household items.

Understanding Business Loans

Business loans are financial products offered by banks, financial institutions, and non-banking financial companies (NBFCs) to help businesses meet their funding requirements. Companies can withdraw a specific amount and repay it over a set period, along with interest. These loans can be used for business expansion, purchasing machinery, working capital, or covering operational expenses

Key features of women business loan schemes in India

1. Mudra Yojana: 

The Mudra Yojana is a government scheme that supports entrepreneurship by providing financial assistance to micro and small enterprises. Women proprietors can avail of loans up to ₹10 lakhs without the need for collateral. Additionally, the scheme offers lower interest rates, making it easier for women entrepreneurs to start or expand their businesses

2. Stand-Up India Program: This program aims to facilitate the establishment of self-enterprises among women and other underrepresented groups. It provides bank loans ranging from ₹10 lakh to ₹1 crore to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and one female borrower per bank branch. The loans are intended for setting up greenfield businesses in the trading, manufacturing, or service sectors

3. Mahila Coir Yojana: The Mahila Coir Yojana empowers women in the coir industry by offering skill development training and subsidizing spinning equipment. The scheme provides subsidies of up to 75 per cent of the cost of equipment and machinery for women entrepreneurs. It also offers a margin money subsidy of up to 25 per cent of the project cost.

4. Udyam Shakti: Launched under the Ministry of MSME, the Udyam Shakti scheme encourages social entrepreneurship by providing affordable goods and services. It offers markets, training sessions, mentorship, incubation centres, and business planning assistance for women entrepreneurs. The scheme supports projects up to ₹25 lakhs, with ₹10 lakhs specifically allocated for service-based industries.

5. Credit Guarantee Fund Trust for Micro and Small Enterprises: A joint initiative of SIDBI and the Ministry of MSME, this program extends collateral-free loans to micro and small businesses. It offers credit facilities up to ₹200 lakhs for both new and existing businesses. Since loan approvals are based on the viability of the project, no collateral or third-party guarantees are required.

In conclusion, women’s business loan programs are crucial in empowering female entrepreneurs to have the financial provision to overcome impediments and realize their businesses. Besides boosting women to raise profitable businesses, these programs positively impact India’s economic development. To transform their business ideas into reality, potential female businesswomen should identify these programs, understand the requirements for eligibility and capitalize on these opportunities.

(Note: Raising a loan comes with its own risks. So, due caution is advised)