Business Loan Schemes For Women Entrepreneurs

Today’s contemporary women are breaking all stereotypes and increasingly focusing on carving a niche for themselves in the competitive world of business. Amazingly, this ambition is also permeating into the lesser developed regions of India. Especially for women entrepreneurs in rural areas, there is a pressing need for adequate funds to kick-start their businesses and arranging for the seed capital is often a major challenge.

To encourage budding women entrepreneurs and promote women-oriented businesses in India, the Indian government has made the following financial/subsidy schemes available through leading banks across the country:

Bharatiya Mahila Bank

Bharatiya Mahila Bank (BMB) started operations just three years ago, and today, it has managed to set up 45 branches across various parts of India. Underprivileged, unbanked, economically neglected and discriminated women who aspire to start their own business are one of BMB’s key target segments.  The bank extends a range of financial assistance programs for women and the following are some of the key ones.

BMB Annapurna, categorised under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) Scheme, is provided to women who wish to establish a food business. The funds can be used as working capital to buy kitchen equipment and various other requirements for a small food business.

Offered at an interest rate of 11.75% (base rate 10.25% + 1.50%), Annapurna is a collateral-free loan with a three-year repayment period and a one-month moratorium period. It is applicable to women entrepreneurs who run either an individual business or a partnership firm. Though there is no collateral requirement, guarantor is required to secure this loan.

BMB Parvarish, also provided under the CGTMSE Scheme, this is a loan provided for the benefit of women who want to start a day care center business. This too is a collateral-free loan having a tenure of up to five years and offered at an interest rate of 12.25% (base rate + 2.00%).

BMB Shringaar, again under the CGTMSE Scheme, this business loan can be availed by women who wish to set up a small business related to beauty parlour, spa or salon. Shringaar is a loan provided at an interest rate of 12.25% (base rate + 2.00%), and it can be repaid within seven years.

Note: All the above loans from Bharatiya Mahila Bank are offered for an amount of up to Rs 1 crore.

Trade Related Entrepreneurship Assistance and Development (TREAD) Subsidy Scheme for women

TREAD scheme for women, provided by the Ministry of Micro, Small and Medium Enterprises, provides financial assistance to women entrepreneurs by offering a subsidy of up to 30% of the total project cost. Lending institutions assess this total project cost and offer the balance loan assistance.

  • Women applicants who can apply for a loan under this scheme are mostly underprivileged, semi-literate, or illiterate
  • This scheme is aimed at helping women who do not receive financial assistance from banks
  • The subsidy request under this scheme is taken into consideration only if it comes through an NGO (non-government organisation)

Mahila Udayam Nidhi

Mahila Udayam Nidhi is a subsidy scheme launched by the Puducherry (Pondicherry) Government. It is aimed at helping women entrepreneurs who wish to set up an SSI unit in Puducherry’s service sector.

A project worth Rs. 10 lakhs is offered a seed capital of approximately 25% as subsidy – of the 75% balance, 10% is funded as Promoter Contribution and 65% is funded as a term loan. The loan repayment timeframe ranges between six to eight years, inclusive of a moratorium period of up to two years.

Mahila Coir Yojana

The Mahila Coir Yojana subsidy scheme provides financial assistance to rural women involved in coir works who are looking for appropriate funding options.

  • The scheme provides unmotorised/motorised traditional ratts (advanced coir-spinning charkhas) that are required by women engaged in spinning coir yarns.
  • Under this scheme, 75% of the motorised ratt’s total cost is provided by the Coir Board and the balance 25% is raised from various financial institutions.
  • The benefits of the scheme are restricted to one person per family.

Stree Shakthi

The Stree Shakthi package is for women entrepreneurs running small businesses with at least a 50% stake in the firm. It offers all the requisite financial assistance to establish a small or medium business. However, only women who have completed the Entrepreneurship Development programmes qualify for this loan (These are programmes organised by state level agencies). Under the Stree Shakthi package, an interest concession of 0.50% is offered on loans availed of above  Rs. 2 lakhs.

Dena Shakti Scheme

The Dena Shakti scheme provided by Dena Bank extends various financial services to promote women-owned businesses. Loans under Dena Shakti Scheme can be availed at a 0.25% interest rate concession in comparison to similar business loans. These business loans are provided to women engaged in the manufacturing sector, agriculture and allied activities. Women business owners who run small enterprises, retail stores and micro-credit facility may also avail this loan.

Cent Kalyani Scheme

Central Bank of India has initiated the Cent Kalyani Scheme for the welfare of women entrepreneurs. Under this, scheme, women entrepreneurs are provided with financial assistance needed to begin a new venture. This scheme offers loans to experienced business owners, new business owners, self-employed women and also professional women. These women-centric business loans can also be availed by small-scale industry owners, retail traders, and women entrepreneurs involved in agricultural and allied activities, village and cottage industries.

Mahila Udyam Nidhi Scheme

Mahila Udyam Nidhi scheme (MUN) is an initiative launched by the Small Industries Development Bank of India (SIDBI). The scheme offers financial assistance of up to Rs.10 lakhs to women entrepreneurs who wish to set up a new small scale industrial venture.

Udyogini Scheme

Punjab and Sind Bank extends the Udyogoni Scheme to help women business owners avail loans at lower interest rates and under liberal terms, thereby serving as a motivation for them. These loans are offered to women for setting up small-scale industries, business enterprises and to promote agricultural activities as well. Retail traders and other self-employed female entrepreneurs can also take this loan to expand their existing businesses or to set up new ventures.