Business Loan for women

Common Issues Faced by Women in Funding A Business

May 25, 2022 • 3531 views

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

Mindset

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.

Personal responsibilities

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.

Financial Problems 

Another major challenge that women encounter while growing their businesses is the limited sources from where they can get financial support. This usually happens due to gender bias that still exists in some parts of the country, posing a financial challenge for women entrepreneurs.

Also Read :- How Can Women in India Avail of a Loan to Expand Their Business?

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.

Benefits 

  • 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. 

Eligibility

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.

Benefits

  • 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
  • Minimal documentation

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.

Eligibility

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.

Benefits

  • Secured loan with a low-interest rate and minimum eligibility.
  • Flexible payment option

Personal loan

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.

Eligibility

Monthly income and credit score are important requirements for determining the amount of loan that can be approved.

Benefits

  • 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

FAQs

  • How must women entrepreneurs deal with the challenges faced in funding their businesses?

Women entrepreneurs must do their research on different financing options and lending institutions that can help them fulfil their business goals. It is important to compare lenders, interest rates, and loan terms to find an offer that best suits their requirements.

  • How does limited mobility act as an obstacle for women entrepreneurs in India?

Most women entrepreneurs are expected to not only manage their business but also their household and societal duties. This can result in some not being able to grow their enterprise beyond a certain point. Although restricted mobility is a barrier, the Digital India initiative is making it easier for these entrepreneurs to expand their business without having to worry about geographical limitations.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Business Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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