The Stand-up India scheme and Mudra Yojana are two schemes launched by the government to provide business loans for women at attractive interest rates.
Small Business Loans for Women: Eligibility and Interest rates
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Women entrepreneurs have time and again proven that the capability to make a business successful is not exclusive to men. Realising the structural inequalities being perpetuated and to rectify the demographic imbalance in the economic sphere, various banks and NBFCs provide business loans for women with attractive terms and conditions through various schemes specially designed for them.
Small Business Loan for Women: Schemes
Amongst the various loan schemes offered for women entrepreneurs, some of the most famous ones include:
1. Union Nari Shakti Scheme
This scheme is implemented by the Union Bank and provides business loans to MSMEs owned and managed by women. The scheme also provides loans to Women’s Self-help Groups (SHGs) with an Udyam Registration.
Under the scheme, Union Bank provides term loans for investment in business premises or machinery and cash credit for working capital requirements.
The interest rate provided under Union Nari Shakti Scheme is dependent upon whether the enterprise is small or micro, and the credit score of the borrower with the lowest interest being offered at MCLR+1.15% and the highest interest rate at MCLR+2.40% as provided on the website of the Union Bank of India.
2. PNB Mahila Udyami Scheme
This scheme is implemented by the Punjab National Bank (PNB) and provides term loans and overdraft facilities up to INR 10,00,000 to women entrepreneurs for income generation, acquisition of fixed assets, or expansion, modernisation, or setting up of new units.
Women entrepreneurs can avail a credit facility under PNB Mahila Udyami either as an individual borrower, or through an enterprise with a minimum 51% shareholding of women.
In addition, preference would be given to women holding an SC, ST, or BPL card and women entrepreneurs trained in R-SETIs/any other training institute. This scheme does not require any collateral as there is CGTMSE coverage.
3. KBL Mahila Udyog
Karnataka Bank provides term loans and working capital loans to businesses led by women through its KBL Mahila Udyog scheme. A woman entrepreneur could avail a loan under this scheme as an individual, through a firm/company, or through a Self-help Group.
- Eligible borrowers could get a working capital loan up to INR 2,00,000 or a term loan up to INR 10,00,000.
- The loan amount under this scheme is covered under the CGTMSE scheme and is thus collateral-free.
- The interest rate for a loan through KBL Mahila Udyog is 11.92% as of 28/09/23.
4. Stand up India
In addition to the schemes provided by several banks for women entrepreneurs, women can get a loan under the Stand-up India scheme launched by the Government.
All women entrepreneurs above the age of 18 and who have not defaulted to any bank/NBFC are eligible to get a loan for greenfield projects.
The scheme stipulates that women entrepreneurs can avail a from any lender at the lowest interest rate of the credit rating category of the specific lender, with the maximum rate of interest not exceeding MCLR+3%+tenor premium.
Small Business Loans for Women: Eligibility
The eligibility criteria for small business loans under the above-mentioned scheme are:
1. Union Nari Shakti Scheme
MSMEs owned and managed by women. ie. 51% shareholding with women. In the case of a company, the majority of the directors should be women. In the case of a partnership firm, the majority of the partners should be women. Self-help Groups having Udyam Registration.
2. PNB Mahila Udyami Scheme
- Any enterprise with not less than 50% shareholding with women.
- Individual women/Women entrepreneurs.
- Borrowers must not have defaulted to a lender.
- Borrowers who have availed any credit facility as a beneficiary of a government-sponsored scheme are not eligible.
3. KBL Mahila Udyog
- Individual women
- Enterprises with at least 51% controlling stake with women.
- Women Self-Help Groups.
4. Stand up India
- Women entrepreneurs with at least 18 years of age.
- Enterprises with at least 51% shareholding and controlling stake with a woman entrepreneur.
- Projects under this scheme should be greenfield in either manufacturing, services, agri-allied, or the trading sector.
- The borrower should not be in default to any financial institution.
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Small Business Loans For Women: Interest Rates
The interest rates under the schemes for women entrepreneurs is as such:
1. Union Nari Shakti Scheme
The rate of interest under the Union Nari Shakti Scheme is dependent upon the credit category of the borrower and the size of the enterprise.
Small enterprises
- For categories UBI-1, UBI-2, and UBI-3, the rate of interest offered to women entrepreneurs with small businesses is MCLR+1.40 per cent.
- For categories UBI-4 and UBI-5, a business loan for women is offered at the interest rate of MCLR+2.40 per cent.
Micro enterprises
- For categories UBI-1, UBI-2, and UBI-3, the interest rate offered to women entrepreneurs is MCLR+1.15 per cent.
- For categories UBI-4 and UBI-5, an interest rate of MCLR+1.90 per cent is offered.
2. PNB Mahila Udyami Scheme
The rate of interest under the PNB Udyami Scheme is based on the market rates.
3. KBL Mahila Udyog
The effective rate of interest under the scheme is 11.92 as on 28/09/23.
4. Stand up India
Loans under the Stand-up India scheme are facilitated through various lenders at affordable interest rates. The scheme makes it mandatory for lenders to provide the loan at the lowest rate of interest offered by the lender for that category, with the maximum rate not exceeding MCLR+3%+tenor premium.
Documents Required For Business Loans For Women Entrepreneurs
While the documentation for a business loan for women may differ from lender to lender, here is an overview of the documents that the borrower may have to furnish while filling the application form of banks/NBFC-
- KYC documents- Aadhaar, PAN Card, Voter’s ID Card, Driving License, Passport, etc.
- Last 12 months’ bank account statement.
- GST Registration Certificate.
- Udyam Registration Certificate for MSMEs and SHGs.
- Last 3 years’ financials with ITR and COI.
- GSTR-3B of the last 12 months.
In case the business loan is sought for a greenfield project (as in the case of the Start-up India Scheme) or by new enterprises/new-to-credit borrowers, the lender may provide laxity in the documentation process.
FAQs
1. Can a woman get a loan for business?
Yes, there are various schemes for women entrepreneurs that offer business loans for women at affordable rates.
A few schemes offering a business loan for women are: the Stand-up India scheme by the government, KBL Mahila Udyog by the Karnataka Bank, Union Nari Shakti Scheme by the Union Bank of India, and PNB Mahila Udyami Scheme by the Punjab National Bank.
2. Who is eligible for a women’s business loan?
Under the Stand-up India scheme, women above the age of 18 can get a business loan for greenfield projects.
3. How much loan can women get?
Under the KBL Mahila Udyog Scheme by the Karnataka Bank, women entrepreneurs can get a loan up to INR 10 lakhs. Similarly, women entrepreneurs can get a loan amount of upto INR 10 lakhs under the PNB Mahila Udyami Scheme as well.
4. Is there any special loan for women?
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