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  • Small Business Loans for Women

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  • Many banks and financial companies in India offer small business loans to women to help them run or expand their small businesses. The interest rates for these loans range between 8.75% and 9.00% while the repayment tenure can go up to 10 years. Women can avail a maximum of Rs. 1 crore as loans to fund their small businesses.

    Top Banks Offering Small Business Loans to Women

    Name of the Bank Name of the Scheme Interest Rate Loan Amount Repayment Tenure
    Central Bank of India Cent Kalyani 8.75% to 9.00% Up to Rs.1 crore -
    Punjab National Bank Mahila Udyam Nidhi Scheme Depends on Project cost Up to Rs.10 lakh Up to 10 years
    Oriental Bank of Commerce Orient Mahila Vikas Yojana Scheme Concession of 2% on the normal interest rates Up to Rs.25 lakh Up to 7 years
    MUDRA Pradhan Mantri Mudra Yojana Linked to MCLR Up to Rs.10 lakh Up to 5 years
    State Bank of India Stree Shakti Package Concession of 0.5% for loans over Rs.2 lakh - -

    Cent Kalyani Scheme – Features

    • The scheme is targeted at women entrepreneurs who wish to start a new business or expand their existing business in the manufacturing and services sector.
    • The loans offered are in the form of overdraft, cash credit, letter of credit, letter of guarantee, etc.
    • No collateral security or third-party guarantee required to avail the loan.
    • You need not pay any processing charges to avail the loan.
    • Optional comprehensive insurance is available for machinery equipment, stocks, etc.
    Rate of Interest Margin Processing Fee Quantum of Loan
    • Loans up to Rs.10 lakh – 8.75%
    • Loans above Rs.10 lakh to Rs.1 crore – 9.00%
    20% Nil Up to Rs.1 crore

    Mahila Udyam Nidhi Scheme – Features

    • This scheme offers support to women entrepreneurs to set up new projects or enhance viable sick units in the small-scale sector.
    • The loan is offered by Small Industries Development Bank of India (SIDBI) and Punjab National Bank.
    • Different plans are offered for the purchase of auto-rickshaws, beauty parlours, day care centers, etc.
    • The Mahila Udyam Nidhi Scheme also offers support with the upgradation and modernisation of existing projects.
    • The interest rates depend on the market rates and are reviewed regularly.
    Rate of Interest Loan Amount Repayment Tenure Moratorium Period
    Based on market rate Rs.10 lakh 10 years including moratorium period 5 years

    Orient Mahila Vikas Yojana Scheme – Features

    • Women who hold a 51% share capital jointly or individually in a proprietary concern can avail this loan.
    • For loans ranging from Rs.10 lakh to Rs.25 lakh, no collateral is required to avail the loan.
    • Women entrepreneurs can enjoy a concession of 2% on the interest rates.
    • The loans need to be repaid within 7 years.

    Pradhan Mantri Mudra Yojana – Features

    • All individuals, including women, are eligible for the Mudra loan.
    • These loans are offered by commercial banks, small finance banks, regional rural banks (RRBs), cooperative banks, non-banking financial companies (NBFCs), and microfinance institutions.
    • The loans are offered under 3 categories – Shishu, Kishore, and Tarun to fund the various stages of the small/micro enterprise business units.
    • Loans availed under the Mudra loan can be used for setting up or expanding the business enterprises in the manufacturing, trading, and services sector.
    • The loans will be in the form of working capital and term loan.
    Rate of Interest Quantum of Loan Margin Processing Fees
    Will vary from lender to lender
    • Shishu – Up to Rs.50,000
    • Kishore – Rs.50,0001 to Rs.5 lakh
    • Tarun – Rs.5,00,001 to Rs.10 lakh
    • Up to Rs.50,000- Nil
    • Rs.50,001 to Rs.10 lakh – 10%
    • Shishu & Kishor – Nil
    • Tarun – 0.50% plus taxes

    Stree Shakti Package – Features

    • This is a concession scheme run by the State Bank of India (SBI) to support women entrepreneurs.
    • To avail this loan, an enterprise should have at least 50% of its share capital held by women.
    • A 5% reduction will be made in the margin depending on the loan category.
    • For loans over Rs.2 lakh, women entrepreneurs will get a concession of 0.5% in the interest rates.
    • No security or collateral needs to be provided for loans up to Rs.5 lakh.

    Eligibility Criteria

    The basic eligibility for women to avail a small business loan is that they should either own the whole small or microenterprise or hold at least 51% of the stakes in the enterprise. The other eligibility criteria such as minimum age, income, etc., will vary from lender to lender.

    Documents Required

    Application form Filled and duly signed
    KYC Documents Business entity proof, partnership deed, incorporation certificate, shops and establishment certificate, Articles of Association (AOA)
    Financials
    • Projected turnover and current year performance
    • Tax audit reports, balance sheet, profit and loss report, VAT returns, audited and provisional financials, etc.
    Bank Statements For the last 6 months
    Photographs Passport-size photograph of applicant/co-applicants
    PAN Card
    • Of partners/directors/proprietors/promoters
    • Of the business entity
    Address Proof
    • Of the business entity
    • Of directors/promoters/partners/proprietors

    Benefits of Small Business Loans for Women

    • Easily accessible – These days, small business loans for women are offered by many leading banks and financial institutions to encourage women entrepreneurs. Also, these loans do not require women to provide collateral, making it easy to avail.
    • Concession on interest rates – Women who wish to avail small business loans can enjoy a concession on the interest rates. For instance, SBI offers a concession of 0.5% on business loans for loans over Rs.2 lakh. Low interest rates can help women entrepreneurs to use the money saved to scale their business.
    • Easy repayments – Women entrepreneurs availing small business loans can repay the loan amount in easy equated monthly instalments (EMIs). Lenders understand that a business can go through many ups and downs which is why they offer easy and flexible repayment options.
    • Business growth – Small business loans can encourage women entrepreneurs to start their own business or scale up their existing business. For any business to grow, it is imperative to have adequate funds and that’s when small business loans can help.

    FAQs

    1. What is the EMI that I need to pay towards my small business loan?

    Answer: The EMI amount that you need to pay each month will depend on the amount of loan you avail, the interest rate charged by the lender, and the repayment tenure you choose. You can use the EMI Calculator to ascertain the EMI on your small business loan by entering the loan amount, tenure, and the interest rate.

    2. Do I have to provide security to avail a small business loan?

    Answer: Providing collateral or security is not mandatory to avail a small business loan but providing one can help you fetch lower interest rates and can enhance your loan amount.

    3. I have a small business that I set up with my husband. Can I get a discount on the interest rate on a small business loan to expand our business?

    Answer: If you wish to avail a small business loan to scale your business, you can avail the ones that are meant especially for women entrepreneurs as the interest rates are lower. However, to be eligible for such loans, you need to own 51% stakes in the business.

    4. I wish to open a fashion boutique. Am I eligible to get a business loan?

    Answer: Yes, under the Pradhan Mantri Mudra Yojana (PMYY), you can avail a business loan to start your own fashion boutique. Any activity that results in income generation is eligible for a small business loan under the Mudra scheme.

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

    Answer: Yes. All commercial banks, RRBs, small finance banks, microfinance institutions, NBFCs, etc., offer loans under the Mudra scheme.

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