Business Loan For Women:

Several studies across the globe have proven the efficiency of women in establishing and running a business successfully and in equal competence as men. A Bain & Company report suggests that women-owned businesses contribute as much as 20% to the total number of enterprises in India.

Yet, female participation as business owners has been significantly disproportionate in the country. One can identify such contrasting contributions of women to several reasons, both societal and financial. Two decades back, the accessibility of financing facilities necessary for setting up a business was limited for women in India. 

That phenomenon, however, has witnessed a significant change in recent years with an array of options for business loans for women. The Indian financial market has become more inclusive, with financing options more forthcoming for businesswomen. 

What Are The Different Business Loan Options For Women?

The easy availability of business loan options has not only improved female participation in businesses but also led to similar economic growth via proportionate contributions. Women entrepreneurs can today access a variety of credit options for their enterprise. The different women business loan options available in the Indian financial market are – 

  • Commercial Loan:

Business women looking to raise finance for their existing enterprise can opt for a commercial loan. Usually, lending institutions, such as a bank or NBFC, provide this credit facility. It is ideal for small and mid-scale businesses. 

A commercial loan does not come with any end-use restrictions. Once a lender credits the loan amount to the borrower’s account, she can utilise it to address a range of business expenses. Borrowers can invest it in infrastructure development, adding newer products to the inventory, business growth, etc. 

Nonetheless, the eligibility criteria for a commercial loan are stringent since it’s an unsecured credit facility. Thus, prospective borrowers should be well-versed with such criteria before applying. 

  • Invoice Discounting:

Bill discounting is an easy way to access business loans for women. Numerous individuals utilise this credit facility to regulate their business’s cash flow and ensure convenient operational activities.

Invoice discounting allows enterprises to tap into the creditworthiness of their debtors to avail a cash advance against their unpaid bills, thus, enabling them to get access to funds tied up in the unsettled invoices prior to the due date and streamline their working capital. 

Businesspersons can use such extended amounts to mitigate different working capital needs. They can restock supplies, pay creditors in advance, disburse wages, etc. without waiting for payment due dates to arrive. 

With KredX, you can leverage your business’s unpaid bills to receive a cash advance within 24 – 72 hours*. Simply upload the documents on our portal to avail hassle-free invoice discounting services. 

  • Loans Against Property:

Women entrepreneurs  can leverage the equity of their residential or commercial property to avail a business loan. The lending institution assesses the value of such property and provides a percentage of that as a loan. 

Business women can use this credit facility to address mid to large-scale expenses as lenders extend substantial loan amounts. They can invest it in business development projects, purchase long-term assets, buy new equipment, consolidate existing high-interest debts, etc. 

Nevertheless, a loan against property involves extensive formalities and documentation. Hence, it might not be suitable for emergency funding requirements since the processing requires considerable time. 

  • Inventory Loan:

Financial institutions also extend credit against the value of business inventory. Individuals can, thus, utilise their stock to avail necessary funds for their business.

Such business loans for women are ideal for addressing small-scale financial requirements of an enterprise. An inventory loan does not prohibit the trading of collateralised stocks. Borrowers can sell the pledged asset and restock them.

However, if the borrower is unable to repay such loan, the lending institution can sell off the inventory to recover its losses.

  • Government Schemes:

The Indian government has been at the forefront of promoting female participation in the realm of self-employment. The Indian administration has initiated a number of financing schemes for businesspersons, including exclusive initiatives for women. 

For instance, under the Annapurna Scheme, business women engaged in the food catering sector can avail a small business loan of up to Rs. 50,000 to buy necessary kitchen equipment. 

Other than that, there’s also the Mudra Yojana Scheme, wherein individuals can avail up to Rs. 50 Lakh as a business loan. However, it requires collateral or a guarantor if the loan amount is above Rs. 10 Lakh. 

Individuals can also check out if their state governments are offering any schemes for facilitating or providing business loans for women

As India’s leading integrated cash flow solutions provider, we at KredX offer loans with minimum formalities or documentation. Hence, you can mitigate business emergencies conveniently. 

What Are The Benefits Of Women Business Loan?

A business loan offers the following advantages to women – 

  • Access to external funding – Women can venture into self-employment easily with financial backup from such external sources as mentioned above. 
  • Streamlining business finances – Loans allow businesspersons to optimise their enterprise’s financial standing efficiently. 
  • Effective handling of emergencies – Individuals can deal with business emergencies with more efficiency by availing credit facilities like invoice discounting. 

Aspiring or existing female entrepreneurs can enjoy these with a business loan for women. If appropriately utilised, borrowers can further their business objectives more efficiently and see through their goals.

FAQs on Business Loan for Women:

A. It differs across financial institutions in India. However, certain criteria that hold for all business loans are that the borrower should possess a high credit score and a business operating for more than 2 years.