Business Loan for Women in India – A Complete Guide

February 3, 2025
business loan for women
Quick Summary

Quick Summary

  • business loan for women provides financial support to female entrepreneurs in India with benefits like lower interest rates, flexible repayment options, and government schemes.
  • Popular government schemes such as MUDRA, Stand-Up India, and Stree Shakti Yojana offer financial assistance to women starting or expanding their businesses.
  • To apply, women need to meet eligibility criteria, prepare necessary documents, and choose from various banks or government-backed schemes for easy loan approval.

Table of Contents

Starting and growing a business requires money, and for women entrepreneurs in India, financial support is crucial. A business loan for women is a special financial product designed to help women start or expand their businesses. These loans offer various benefits, such as lower interest rates, flexible repayment terms, and government-backed support.

In this guide, we will provide detailed information on business loans for women, including eligibility criteria, required documents, application processes, and government schemes available for women entrepreneurs in India.

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What is a Business Loan for Women?

A business loan for women is a type of loan provided by banks, financial institutions, and government schemes to support female entrepreneurs. It helps women to finance their business needs, such as purchasing equipment, expanding operations, or covering working capital requirements.

Key Features:

  • Special interest rates for women entrepreneurs.
  • Flexible repayment terms.
  • Government subsidies and schemes available.
  • No collateral options for small loan amounts.

Benefits of Business Loan for Women

Women entrepreneurs in India can benefit from several advantages when applying for a business loan:

  • Lower Interest Rates: Many banks offer discounted interest rates to women entrepreneurs.
  • Government Support: Special schemes like MUDRA and Stand-Up India provide financial assistance.
  • Encouragement for Startups: Helps women start their business with less financial burden.
  • Flexible Loan Terms: Options to repay in easy installments over a period of time.
  • No Collateral Loans: Some financial institutions offer loans without security.

By leveraging the benefits of a Business Loan, you can take significant steps toward achieving your business goals and making your venture a success.

Types of Business Loans Available for Women

Many banks, financial institutions, and government agencies provide short-term as well as long-term loans for women to start a business in India. Here are the various types of business loan for women in India:

1. Small Business Finance

Also known as SME loans, these are small business loans that are offered by many financial institutions. This small business loan for women is largely available for existing small and medium-scale businesses at affordable interest rates. However, some lenders also provide secured and unsecured funding for start-ups. You need to have a good credit score to avail of this loan. You can even choose a Line of Credit (LOC). This option is ideal to fulfill your short-term funding requirements.

2. Commercial Business Loan

If your needs are higher than what you can borrow through an SME loan, you can apply for a commercial business loan. Ideal for medium-scale enterprises, this loan can be used for expanding your business operations. However, your business has to be at least one year old to avail of this loan.

3. Loan against Securities

If you have shares, mutual funds, or life insurance policies, you can apply for a Loan against Securities. You will be entitled to a loan up to 60 to 70 percent of the market value of these investments. Since this is a secured loan, the eligibility requirements will be minimal.

4. Personal Loan

If you are a homemaker wanting to start a new business from home, you can apply for a personal loan without any collateral. Since you need a good credit score and decent monthly income, you can even add your spouse as your co-applicant and increase your chances of getting one. You can use this loan for any purpose.

5. Government Schemes

These refer to the multiple finance schemes launched by the Government to promote women’s entrepreneurship. These include the Mudra Loan for Women, the MSME Loan for Women, and the Mahila Udyam Nidhi Scheme which can help you get a ladies’ business loan at a very low interest rate. Although the eligibility criteria are minimal, the processing time of this loan is a long one.

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Top Business Loan Schemes for Women Entrepreneurs

Business Loan for Women

From Shopclue’s founder Radhika Agarwal to Limeroad’s mastermind Suchi Mukherjee, and Nykaa’s founder Falguni Nayar, each of these women has added to the success of women in entrepreneurship in India. Having recognized the uniqueness that women bring into business ventures, the Government of India has taken some significant steps to provide startup business loan for women to start a business.

Here is a list of such women’s business loans from the government India:

1. Mudra Yojana

The Pradhan Mantri Mudra Yojana (PMMY) or the Mudra Loan for Women is a government scheme designed for women entrepreneurs. It helps them stand strong and focus on building a better future. Here you get a credit card called Mudra card that you can use to maintain the cash flow of your business. From ₹50,000, you can avail of a loan up to ₹10 Lakhs, through this scheme. Available at an affordable interest rate, this loan requires no collateral. However, your business has to be in the non-agricultural, non-corporate, and non-farming sectors. Also, you must hold at least a 50% stake in your company.

2. TREAD Scheme

The TREAD (Trade-Related Entrepreneurship Assistance Development) scheme is a government scheme where the Government provides 30 percent assistance for the project, with the rest of it funded by the bank that will appraise your business. Apart from the financial assistance, this scheme also provides the necessary counseling and training for the women to develop the required technical skills. However, you should have experience in developing and handling women-centric economic projects.

3. Mahila Udyam Nidhi Scheme

Mahila Udyam Nidhi Scheme also known as the MUN scheme, this is provided by the SIDBI (Small Industrial Development Bank of India). to encourage women’s entrepreneurship. This loan is made available for the MSMEs (Micro, Small, and Medium Enterprises) at a concessional rate. The project has to be manufacturing, production, or service-related. Your minimum investment should be ₹5 lakhs and you should have a minimum stake of 51% in your business, to qualify for this MSME Loan for Women.

4. Stree Shakthi Package

Self-employed professionals such as beauticians, doctors, architects, and chartered accountants can apply for the Stree Shakti Package. You can get a loan up to ₹20 lakhs without collateral, provided you have more than a 50% stake in your business.

5. Bhartiya Mahila Business Bank (BMB) Loan

This refers to the multiple business loan offered by the BMB Bank. The interest rates for this business loan are decided by the RBI and SBI. You can get up to ₹20 crores as a loan under this scheme if you have collateral. If not, you can get a loan of up to ₹1 crore at a maximum 7-year repayment period.

Scheme NameLoan AmountInterest RateEligibility
MUDRA Loan SchemeUp to Rs. 10 lakhStarting from 7%Women micro-entrepreneurs
Stand-Up IndiaRs. 10 lakh – 1 crore6.5% – 8%SC/ST and women entrepreneurs
Annapurna SchemeUp to Rs. 50,000As per bank policiesWomen in the food business
Stree Shakti YojanaVaries by bank0.5% concessionWomen with 50% ownership
Business Loan for Ladies from Government

Apart from the government scheme, there are also other private schemes such as Bajaj Finance Business Loan that support women entrepreneurs.

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Eligibility Criteria for Business Loan for Women

To apply for a business loan, women entrepreneurs must fulfill certain eligibility requirements. These criteria vary based on the lender, but generally include:

  • Woman Entrepreneur: The applicant must be a woman who owns or plans to start a business. This is the primary condition for getting a Business Loan.
  • Age Limit: Most lenders have an age requirement, usually between 21 and 65 years old.
  • Business Plan: You need to have a clear and detailed business plan. This shows the lender that you have a solid strategy for using the loan and making your business successful.
  • Credit Score: A good credit score (650 and above preferred) increases your chances of getting a Business Loan. Lenders look at your credit history to see if you have a record of repaying loans on time.
  • Financial Stability: Lenders often require proof of stable income or financial statements to ensure that you can repay the loan.
  • Business Registration: Your business should be registered and have the necessary permits and licenses. This proves that your business is legitimate and legally allowed to operate.

Meeting these eligibility criteria is essential for securing a Business Loan. Make sure you review the specific requirements of the lender you’re applying to, as they may have additional criteria.

Documents Required for Business Loan for Women

When applying for a Business Loan, you’ll need to gather some important documents. Here is a list of the common documents required:

  1. Proof of Identity:
    • Aadhaar card
    • PAN card
    • Passport
  2. Address Proof:
    • Utility bills (like electricity or water bills)
    • Rental agreement
  3. Business Registration Papers:
    • Business license
    • Registration certificate
  4. Financial Statements:
    • Balance sheets
    • Profit and loss statements
    • Bank statements
  5. Income Tax Returns:
    • Copies of your income tax returns for the last few years
  6. Business Plan:
    • Detailed plan showing how you will use the Business Loan
    • Repayment strategy

Having these documents ready can help you apply for a Business Loan smoothly. Make sure to check with your chosen lender for any additional documents they might require.

Best Banks for Business Loan for Women in India

Several banks and financial institutions provide business loans with special benefits for women. Some of the top options include:

Bank NameLoan AmountInterest RateProcessing Fee
State Bank of IndiaUp to Rs. 20 lakhStarting from 9.5%1% of loan amount
HDFC BankUp to Rs. 50 lakhStarting from 10%1.5% of loan amount
ICICI BankUp to Rs. 40 lakhStarting from 10.5%2% of loan amount
Bank of BarodaUp to Rs. 25 lakhStarting from 9%1% of loan amount

How to Apply for a Business Loan for Women

Applying for a Business Loan can help turn your entrepreneurial dreams into reality. Here’s a simple guide to get you started:

  1. Research and Choose the Right Lender: Different banks and financial institutions offer Business Loans for Women. Look for ones that have favorable terms, such as lower interest rates and flexible repayment options.
  2. Check Eligibility Criteria: Before applying, make sure you meet the lender’s requirements. Common criteria include being a woman entrepreneur, having a business plan, and meeting specific income or credit score standards.
  3. Prepare Your Documents: Gather all necessary documents such as proof of identity, business registration papers, financial statements, and a detailed business plan. These documents will support your application and show the lender you’re serious about your business.
  4. Fill Out the Application Form: This step involves providing detailed information about yourself and your business. Make sure you fill out the form accurately and completely.
  5. Submit Your Application: Once you’ve completed the application form and gathered all the required documents, submit them to the lender.
  6. Await Approval: After submission, the lender will review your application and documents. They may also contact you for additional information or clarification. Once approved, you’ll receive the Business Loan, which you can use to grow your business.

Following these steps can make the process of applying for a Business Loan straightforward and stress-free.

Tips to Get Business Loan Approval Easily

Getting approval for a Business Loan can be easier if you follow these tips:

  1. Maintain a Good Credit Score: Lenders look at your credit score to determine your creditworthiness. Pay your bills on time and avoid accumulating debt to keep your credit score high.
  2. Prepare a Strong Business Plan: A clear and detailed business plan shows lenders that you have a solid strategy for using the loan and making your business successful. Include details about your business goals, target market, and financial projections.
  3. Organize Your Documents: Have all necessary documents ready, such as proof of identity, address proof, business registration papers, financial statements, and income tax returns. This shows the lender that you are prepared and serious about your application.
  4. Show Financial Stability: Lenders prefer applicants who have a stable income or a profitable business. Provide evidence of your financial stability through your bank statements and financial records.
  5. Choose the Right Lender: Different lenders have different criteria and loan terms. Research and choose a lender that offers favorable terms for a Business Loan.
  6. Seek Professional Help: If you’re unsure about the application process, consider seeking help from a financial advisor or business consultant. They can provide valuable advice and guide you through the process.

By following these tips, you can increase your chances of getting approval for a Business Loan and take a step closer to achieving your business goals.

Challenges Faced by Women Entrepreneurs in Getting Business Loans

As per a survey, more than 85 percent of women entrepreneurs faced challenges while availing loans from nationalized banks. Here are a few such challenges you need to overcome, if you want your business loan application to be approved by your lender:

Low Credit Score

Having a good credit score is very important to get your business loan approved at a low interest rate. It shows how disciplined you are, in paying your monthly loan instalments. A CIBIL score of 750 or higher can make it easy for you to get your loan. Make sure you check your credit score with a reputed credit rating agency before submitting your loan application.

Insufficient Cash Flow

This is one of the reasons that can destroy the confidence your lender has in you. Cashflow establishes your capacity to repay your loans after managing your operating expenses. This is why most lenders will ask you to submit your bank statements and your business financial statements.

Too Many Debts

Having too much debt can cut down your chances of getting a business loan for women. This will give an impression to the lender, that you may not be able to repay the loan within time.

Absence of a Concrete Business Plan

A robust business plan is a must for every lender to approve your loan, especially if your business is a start-up. Even if you are not making much of a profit currently, this document will help the lender approve your loan, by considering the prospects of your business.

Lack of Collateral

Most business loans that are given to women entrepreneurs do not require collateral. However, if you need a huge amount you will have to provide collateral. Also, having collateral can give you a better chance to qualify for the loan, at a lower rate of interest, since the risk would be low.

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Conclusion

A business loan for women is an excellent financial solution for aspiring female entrepreneurs in India. With various schemes and benefits available, women can now achieve their business dreams without financial worries. Whether it’s a startup or an established business, these loans provide the necessary support to grow and succeed.

Innovative, low-investment ideas for the hidden entrepreneur in you! Explore our guide on Business Ideas.

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Frequently Answered Questions (FAQ’s)

Q: Is There Any Loan For Women To Start Business?

Yes, there are several loans available for women to start a business in India. Programs like Mudra Yojana, Udyogini Scheme, and Mahila Udyam Nidhi Scheme offer financial support to women entrepreneurs.

Q: Can A Housewife Apply For A Business Loan?

Yes, housewives can apply for business loans. Schemes like Mudra Yojana and Udyogini Scheme are specifically designed to support women, including housewives, in starting their own businesses.

Q: Who Is Eligible For Pradhan Mantri Mahila Loan?

The Pradhan Mantri Mudra Yojana (PMMY) offers loans up to ₹10 lakhs without collateral. It is divided into three categories: Shishu (loans up to ₹50,000), Kishor (loans from ₹50,000 to ₹5 lakhs), and Tarun (loans from ₹5 lakhs to ₹10 lakhs).

Q: Which Is The Best Government Schemes For Female Entrepreneurs In India?

There are several government schemes to support female entrepreneurs in India, including Mudra Yojana, Stand-Up India Scheme, Annapurna Scheme, Dena Shakti Scheme, and Mahila Udyam Nidhi Scheme.

Q: What Is The Business Loan For Women Interest Rate?

Interest rates for business loans for women vary depending on the lender and the type of loan. Generally, rates range from 11.99% to 18% per annum.

Q: How Can A Woman Get A Loan From The Government To Start A Business?

The government of India has started providing loans to women under various schemes, to promote entrepreneurship. You can apply for any of these loans on the official websites of these organizations.

Q: Can A Woman Get A Loan Without A Job?

Having a job will put you in a better position to apply for a loan. However, you can still get a loan if you don’t have a job, provided you offer some collateral against your loan.

Q: Can A Housewife Apply For A Business Loan?

Yes, a housewife can apply for a loan, if she wants to start a business from home. You can apply for a personal loan and include your spouse as the co-applicant. Otherwise, you can apply for a business loan under any of the government schemes and provide some collateral.

Q: Which Bank Is Best For Women Entrepreneurs?

The interest rates at which banks provide business loans for women entrepreneurs differ from one bank to the other. A comparative study of banks providing business loans for women will help you understand which one is the best.

Q: What Is The Business Loan For Women In Hindi?

व्यापार ऋण के लिए महिलाओं के लिए कई विकल्प हैं, जैसे मुद्रा योजना, उद्योगिनी योजना, और महिला उद्यम निधि योजना.

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