Currently, India has an estimated 16 million women-owned and controlled enterprises, which account for less than 20% of the entire sector, as per recent data published in December 2020.
Due to lower accessibility to a loan for women available to finance a business, most working women are job seekers rather than job owners. A recent survey conducted among 350 women solopreneurs and small-scale business owners in urban India reports that the current economic slowdown has negatively impacted about 73% of the respondents. Also, the remaining ones witnessed a near wiped out of business revenue. This was either due to muted customer demand or lack of financial resources to aid their condition.
This is precisely why the Indian Finance Minister, Nirmala Sitharaman, through the February 2021 Union Budget, announced to widen the job market for women to fulfil the 2030 Sustainable Development Goals. To this end, the government and other lending institutions have also made several types of credit options available to women entrepreneurs to help finance their ventures easily.
Following is a list of 6 such funding solutions available to women business owners –
- Mudra Yojana Scheme for women
The Mudra Yojana Scheme for women is a Government of India 2015 initiative to bridge the financial gap between business owners and formal credits.
This scheme offers easy financing to support aspiring women entrepreneurs of the country to set-up or expand their own business. The Mudra card offered through this scheme works like a credit card. This loan for women offers funds of up to Rs.10 lakh to start to inject capital into a micro or small business.
- Udyogini Yojana
An initiative of the Government of India under the Women Development Corporation, the Udyogini scheme is to empower the women entrepreneurs of the rural and underdeveloped areas through subsidised loans. Applicants can avail of a loan up to Rs.3 lakh to start businesses under 88 small-scale industries.
- Loan against securities
A loan against securities is a great source of financing for business women looking to venture out in the market, not as job seekers but business owners. In this loan for women, applicants can guarantee their investments in a mutual fund, stock market or life insurance policies and secure credits against the same.
- Collateral-free business loans
This is the instant loan for business without security, tailored for those looking to avail instant funds. Ideal for medium-scale businesses, this loan can be availed up to a quantum of Rs.45 lakh and enables business owners to expand their business alongside undertaking various other operational tasks. The business loan can be availed against easy to meet eligibility requirements and require minimal documentation.
Further, several financial institutions such as Bajaj Finserv also extend pre-approved offers to ease the process of availing credits across various financial products, including business loans, personal loans, and others. Individuals can check their pre-approved offer by submitting their name and contact information.
- Gold loan for women
Most Indian women possess gold ornaments and jewellery in some quantity. A gold loan for women can be availed by pledging these ornaments as collateral and availing credits against their equity. Recently, the advent of formal lending institutions has made gold loans a popular borrowing option.
Nonetheless, one should note that these credits are usually available against a higher rate of interest.
- Mahila Udyam Nidhi Scheme
Mahila Udyam Nidhi Scheme, a Central government initiative, aims to bridge the equity gap. One of the most popular business loans for women, it promotes MSMEs and small industries to flourish in their areas. Borrowers can avail of a loan of up to Rs.10 lakh and repay the same within ten years. This scheme also aims to support the overall growth of the micro-enterprises of the country.
Irrespective of the business scale and nature, it is impractical for it to thrive without substantial finance, let alone prosper. Availing a loan for women can help businesses to achieve this end without hassle. Nonetheless, before applying for the loan, one should consider the eligibility criteria and other pertinent factors to avoid any hassle.