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Everything You Need To Know About Business Loans For Women

by Nathan Zachary
Everything You Need To Know About Business Loans For Women

Women of today want to venture into business and carve a niche for themselves. Whether it is for starting a new business, expanding the current business, or  matching up to the competition from their male counterparts, they will need the required funds. To encourage further growth for women, financial institutions have come up with business loans for women. To know more about this product’s features and application process, read on. 

Top Features of Business Loans For Women

Here is a list of top features of business loans for women

Easily Available:

The demand for business loans from women entrepreneurs has been steadily increasing in the recent years. More women are coming up with innovative ideas for startups, which will require appropriate funding to grow.

To encourage their growth, many financial institutions have stepped forward to give business loans to women. The lenders will easily sanction a low business loan interest rate if you have a proper business plan, proper sales projections, and a strong credit profile. 

Flexible Tenures:

The small business loan for women offers flexible tenures. Due to this flexibility in the repayment tenure, you can select a term with an EMI amount that is most suitable for your budget. Your tenure will have a direct impact on your budget, so you should make the best decision that you can.

Flexibility in terms of Usage:

As a businesswoman, you will have to face many challenges. You will need funds to deal with a number of issues at once. Sometimes, you will need funds for the replenishment of stocks and inventories. While at other times, you will require funds to purchase new machinery.

If you are an established company, you may wish to acquire a startup. A business loan for women is developed in such a way that it can readily fulfil a variety of business requirements. Furthermore, such loans can be customized to meet your specific needs.

This means that you can apply for a working capital loan to suit your working capital requirements. Similarly, a medical professional may also choose to take a medical equipment loan to buy advanced medical equipment. 

They are collateral free loans:

Women entrepreneurs face challenges when it comes to loans where they have to give a collateral. However, a business loan for women does not require a collateral.

The funds are readily available if you meet the minimum eligibility criteria set by the lender. If you fall short of the minimum eligibility, you can consider adding a co-applicant. 

No Profit Sharing:

There are certain circumstances in which women entrepreneurs raise funds through private equity. However, there are a number of demerits in doing that. For instance, you will have to share profits with investors, and the investors will be involved in all aspects of the business.

Furthermore, whatever decision you make with regards to your company, you will require the involvement of investors. And if your investor is not impressed with your concept, you may have to reconsider your decision soon.

So, you can go in for a business loan as you need not worry about profit sharing. You will only be responsible for paying the amount borrowed plus the interest. 

Business Loans For Women:

Women entrepreneurs are required to provide only minimal documentation when they apply for business loans. This is one of the advantages of business loans for women. 

Best Interest Rates:

The lender assesses your business financials and liabilities before deciding the interest rate. If your business is doing well and if it does not have any loan default to its name, then you will get a low interest rate. 

Preapproved Offers:

A pre-approved business loan is given to creditworthy businesspeople. Businesswomen can benefit in many ways by availing a pre-approved business loan. 

How To Apply For A Business Loan For Women? 

Here are the series of steps to apply for a business loan for women. 

Step 1: Research and find a suitable lending institution.

Step 2: Go to their website and go to the business loan section. 

Step 3: Check the list of required documents on the business loan page and go through the basic eligibility criteria.   

Step 4:  Fill in the online application form and upload all the required documents. 

Step 5: The lender will verify your details. 

Step 6: If the details are accurate and are meeting the required criteria, then one of the representatives of the financial institution will contact you to get additional information required for loan processing. 

Step 7: Post sharing the additional details, the lender will initiate a credit appraisal. They will send you a proposal letter depending on that. The letter will contain information such as the loan amount, interest rate, and a few loan-related charges that are applicable.  

Step 8: You must give your written acceptance through the appropriate communication channel.

Step 9: After acceptance, the lender will disburse the amount to your account shortly.

 Eligibility Criteria Pertaining To Business Loans For Women

  • The age should be at least 18 years and the age limit should be 65 years. Applicants with no earlier loan defaults shall be considered. 
  • MSMEs business loan, individuals, sole proprietorship, partnership firms, limited liability partnerships (LLPs) engaged in trading, manufacturing and services sector are eligible.
  • Annual Turnover: This will be defined by the bank and the lender. 
  • Credit score is also play vital role in business loans.

Five Business Loan Schemes By Banks For Business Women 

Here are 5 business loan schemes for business women provided by banks  

  1. Cent Kalyani provided by The Central Bank of India
  2. Mudra Loan: Mudra Yojana Under Pradhan Mantri Mudra Yojana (PMMY) Scheme is a government scheme. 
  3. Shringaar and Annapurna Loan Schemes given by Bhartiya Mahila Bank (SBI)
  4. Synd Mahila Shakti from Canara Bank
  5. Shakti Scheme from The Bank of Baroda 

Traditionally, women entrepreneurs have found it challenging to get funds for their business due to a number of social stigmas. However, the recent evolution in business finance and the emergence of Fintech platforms have made it easier for women entrepreneurs to get business loans. Today, business loans for women are also helping in self-employment in rural and urban India.  

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