The empowerment of women is important for the economic development of any country. The Government of India, in collaboration with various financial institutions in the country, has introduced several financial schemes to help women entrepreneurs achieve their business goals. Success in any business requires solid working capital. Be it a small-scale industry, cottage industry or large-scale industry.
Despite having the best skills for business and the potential to run a successful enterprise, women are often frustrated by the lack of funding. Hence, the Government of India and several financial institutes have introduced various financial schemes to give the necessary support to women. Whether it is to set up a business from the scratch or expand an existing unit, there are many schemes and loan options available. The loan is designed to make women financially independent.
For the Indian economy to grow at a steady rate of 9 to 10 per cent over the next few decades, we must work towards creating an ecosystem that supports all kinds of women entrepreneurs.
The problem of the low rate of entrepreneurship among women is due to the lack of business loans for women. But the good news is that many independent financial companies provide loans to women to start businesses in India.
Various issues faced by women in funding a business
Indian society has a patriarchal system. Therefore, women entrepreneurs in India face many challenges which include the following:
In India, a woman's adventurous desire is seen as a disadvantage, raising questions about her competitiveness and ability. From time to time, Indian women have broken this stigma, but society has not yet experienced a comprehensive mental transformation where women are treated equally in social, economic, and political setups, at par with men.
Women entrepreneurs are not only responsible for their business. They are also expected to be responsible for the management of the home and family. This is a big disadvantage compared to their male counterparts.
Safety and security
The safety of women is a major concern in India. Because women entrepreneurs may need to work odd hours and travel to new places, ensuring safety can be a problem.
Various types of business loans are:
Small Business Loans:
These loans are mostly available for existing businesses, although some lenders also offer small business loans or SMEs for start-ups. One such loan is the Line of Credit, or LOC, which caters to small to medium-sized businesses, mostly for women entrepreneurs.
Eligibility: A reliable credit score is very important and is used by the lender to establish the final eligibility of the applicant for the loan.
-Affordable interest rates
-Secured and unsecured funds are available
-Ideal for short-term funding needs
Commercial Business Loans:
Ideal for a medium-sized business. The loan amount of Rs 50 lakh or more can be borrowed for 3-5 years.
Mostly offered to businesses that are at least one year old and profitable, and to confirm this, the applicant must submit at least one year's financial statements to the lender.
-Can get a loan of up to Rs. 50 lakhs or more
-Online application and pre-payment facility are available
-The repayment period of 3-5 years
Loans against securities:
Helps to start a small or home-based business. Loans against securities can be obtained against investments in the stock market, mutual funds, and life insurance policies and up to 60% -75% of their market value. These short-term loans are available for 4-5 years.
Proof of ownership of securities is required to be used as collateral. The documentation is detailed and will require a visit to the lending bank's branch as opposed to an online application.
-Secured loan with a low-interest rate and minimum eligibility.
-Flexible payment option
Personal Loans are offered based on the financial capacity of the applicant, so for a homemaker, who has no previous business experience, it can be difficult to apply for a large loan amount. However, there is an option to add a co-applicant for personal loan as a spouse to simplify the process, which helps increase eligibility. It is a very flexible type of loan that can be used for both personal and business needs.
-Monthly income and credit score are important requirements for determining the amount of loan that can be approved.
-Unsecured and flexible loans
-Online application and approval are available
-The option of including co-application simplifies the loan acquisition process.
Benefits of business loans for women
Easily Accessible - These days many leading financial institutions offer small business loans to women to encourage women entrepreneurs. Also, women do not need to provide collateral for this loan, so it is easy to avail of the benefits.
Concessions on interest rates - Women who want to get a small business loan can enjoy discounts on interest rates.
Easy Repayment - Women entrepreneurs with small business loans can repay the loan amount in simple equal monthly instalments (EMIs). Lenders understand that businesses can go through many ups and downs, which is why they offer easy and flexible payment options.
Business Growth - Small business loans can encourage women entrepreneurs to start their businesses or expand their existing businesses. For any business to grow, it is imperative to have adequate funding and a small business loan at that time can help.
If you have a business idea, the next step is to apply for a loan with Poonawalla Fincorp. It is easy to apply for a Poonawalla Fincorp Personal Loan. All you must do is visit the website, enter your KYC details, request approval, and make your entrepreneurial dream a reality.
As a business owner, your reliance on traditional banks is quite understood. After all, very few businesses can survive unpredictable business cycles and manage headwinds without availing of a business loan.
As a small business owner, you may need funding from time to time to continue your business operations. And unlike a few decades ago, availing of business funds has become a lot easier now.
Covid-19, a once-in-a-century pandemic, has hit the Indian economy hard and has affected almost all sectors.
No matter how small, medium or large a business is, they will always require additional cash flow to meet their daily needs. The purpose of getting a loan varies depending on whether you need it to start, run, or expand your business.