From Idea to Funding: A Step-by-Step Guide for Women Entrepreneurs in India Looking to Secure a Business Loan
In recent years, there has been a significant increase in the number of women entrepreneurs in India. Women entrepreneurs are driving economic growth and creating jobs, but they often face challenges when it comes to securing business loans. According to a report by the International Finance Corporation, in India, only 33% of early-stage entrepreneurs are women. The country ranks third in the world in entrepreneurship gender gaps. Despite this, many women entrepreneurs in India have found ways to overcome these challenges and succeed in their businesses.
Business Loan for Women Entrepreneurs
Securing a business loan is crucial for women entrepreneurs in India to grow their businesses and achieve their goals. A business loan can help women entrepreneurs purchase equipment, expand their operations and hire more employees. By securing Shriram Business Loan, women entrepreneurs can increase their chances of success and contribute to the growth of the Indian economy.
Key Highlights
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Types of Business Loans for Women Entrepreneurs
1. Term Loans
Term Loans are used to finance long-term investments, such as the purchase of equipment or real estate. They are typically repaid over a period of one to ten years and have a fixed or variable interest rate.
2. Working Capital Loans
Working capital loans are used to finance day-to-day business operations, such as paying suppliers, purchasing inventory and covering payroll expenses. Working capital loans are typically short-term loans and have a higher interest rate than term loans.
3. Business Lines of Credit
A business line of credit is a flexible form of financing that allows businesses to access funds as needed. Businesses only pay interest on the amount of money they borrow, and the funds can be used for a variety of purposes, such as purchasing inventory or covering unexpected expenses.
4. Government Schemes
There are several loans specifically designed for women entrepreneurs in India. These loans include the Mudra Loan, Annapurna Scheme, Stree Shakti Scheme and so on. These loans have special eligibility criteria and offer lower interest rates to women entrepreneurs.
Did you know?According to the Income Tax Act of India, the interest you pay on business loans can be deducted from your business profits |
Things to Remember While Applying for a Business Loan
- As per the business loan terms and conditions, the applicant’s business should generate the minimum income. It is compulsory to own a business registration certificate.
- While applying for a business loan for women, the applicant needs to compulsorily declare their ongoing loan agreements (if any) to help the agency accurately assess its creditworthiness.
- Typically, business loans have tenures ranging from 12 months to 60 months. Generally, interest rates for business loans may vary widely based on the lender and applicant profile, often starting around 15% per annum for women entrepreneurs. As every business need is different, the profile of the applicant is carefully assessed before arriving at a final interest rate.
- Processing fees are usually around 2% of the loan amount, while closure charges may range from 3% to 6% if paid off early, typically after 6 Women entrepreneurs can obtain loans starting from a minimum amount of one lakh.
What are the documents required while applying for business loans?
When applying for a business loan, you will typically need to provide the following documents for authentication and assessment. Please note that the specific requirements may vary across loan providers. Generally, the following documents are required for authentication & assessment:
- Valid Identity Proof, such as PAN card, Aadhaar card, Voter ID and Driving License Valid address proof, namely the gas bill or the electricity bill
- Recent colour photographs
- Bank statements for the last 6 months
- Trading/ Profit and loss of the previous 3 years of business
- The balance sheet of the previous 3 years of business
- Electronic clearing mandates (ECS) along with post-dated cheques Proof of income
- Any other document as requested by the agency at the time of verification/application
Benefits of Applying for a Business Loan as Women Entrepreneur in India
As a women entrepreneur, there are several benefits of applying for a business loan in India. These benefits include:
Access to Capital: One of the biggest benefits of applying for a business loan is that it provides access to the capital you need to start or expand your business. With the funds from a business loan, you can purchase equipment, hire employees, invest in marketing and more.
Lower Interest Rates: Many banks and financial institutions in India offer lower interest rates on business loans to women entrepreneurs as part of their effort to promote women entrepreneurship in the country.
Flexibility in Repayment: Business loans offer a lot of flexibility when it comes to repayment. You can choose the repayment tenure and payment schedule that works best for your business.
Improves Credit Score: Repaying your business loan on time can help improve your credit score, which in turn can help you access better loan terms and interest rates in the future.
Increases Credibility: Securing a business loan can also help improve your business's credibility and reputation, making it easier for you to attract customers and investors.
Tax Benefits: In India, the interest paid on a business loan is tax-deductible, which can help reduce your overall tax liability.
Apply for Shriram Business Loan Now in 4 Easy Steps
The loan application can be completed from anywhere and at any time. The process is quite seamless and hassle-free.
Step 01: Register and verify with OTP
Step 02: Enter your Personal and Business Details
Step 03: Submit your Documents and Receive a Call from Us
Step 04: Complete your Verification
Step 05: Get your Loan Approved and Disbursed to meet your business needs
Shriram Business Loan EMI calculator available online helps the applicant to compute the monthly equated payments and see if it fits their pocket. The calculator is simple and free to use.
In a Nutshell
Women entrepreneurs in India are an important part of the country's economic growth and development. Despite the challenges they face, it's crucial for women entrepreneurs to take steps towards securing a business loan. However, with the right preparation, a strong business plan, a good credit history and collateral, women entrepreneurs can increase their chances of getting a business loan from Shriram Finance.
It is essential to understand the types of loans available, the eligibility criteria and the terms and conditions before applying. Women entrepreneurs should also explore government schemes that provide loans specifically designed for them. By following these steps, women entrepreneurs can take a significant step towards realizing their business goals.
