Legal Guide

Business Loans for Women -Advantages And Eligibility

by Nandita Meenakshi · 6 min read

Business loans for women

Introduction

It is wonderful to see a considerable increase in the number of women taking on the role of entrepreneur, with small enterprises prospering and seeking to make a positive difference in society. Advancements in company financing have made it easier for female entrepreneurs to get business loans. Today, business loans for women enable self-employment in both rural and urban areas due to the implementation of a number of financial programs to assist women entrepreneurs in achieving their business objectives.

Types of Business loans for women

Guarantee: These are term loans that need security or collateral in accordance with the regulations of the financial institution. Business loans for women can be obtained of up to Rs. 1 Crore without any collateral under the Government of India’s CGTMSE initiative.

Personal Loans: Personal loans are one of the most common ways to fund a small business. They can be used to cover a variety of expenses, like starting fees, equipment acquisitions, and working capital. A personal loan is the best choice among business loans for women.

Equipment Loans: If you want to buy expensive equipment for your business and the equipment can be used as collateral, you may get a secured small business loan for it. These function similarly to a home or automobile loan. The bank will confiscate the equipment if you do not repay the loan.

Working Capital Loans: working capital loans, as opposed to small business loans for women, are intended to pay for long-term assets or investments and are used to fund your company’s day-to-day operations. Such procedures include rent, wages, and debt payments.

Government Schemes/ Business loans for women

1. Shringaar Bharathiya Mahila Bank: This financing is specifically created for ladies who want to open their own beauty salons. This is one of the business loans for women, which was developed in collaboration with major salon brands like Naturals, CavinKare, and Lakme Ltd. This loan is available as a Term Loan or as a Working Capital Loan.

2. Stree Shakti Package for Female Business Owners: This scheme, which is offered at the majority of SBI branches, is open to women who own 50% of a firm or have participated in Entrepreneurship Development Programmes organized by state agencies.

3. Cent Kalyani Scheme: Cent Kalyani Scheme provides small business loans for women who are self-employed or involved in cottage and village industries, small and medium companies, agriculture, retail trade, or government-sponsored initiatives.

Advantages of Business loans for women

1. Convenience: It is very simple to call the bank and discuss the potential of obtaining a business loan for women. This simplicity and ease of access may be extremely beneficial to enterprises. Loan applications, of course, can take a long time to analyze and accept, but they are easier to deal with than the bulk of the alternatives.

2. Control: The key benefit of a bank loan, like with any other type of business loan for women, is the potential to increase cash flow without sacrificing the control of the firm. Other funding alternatives may require selling the business shares to investors in order to obtain quick money.

3. Security: Taking out a business loan with a well-known high street bank provides a high level of security, owing to the long-standing reputation of lenders. This may change when more online lenders enter the market and help women establish themselves in the sector of business financing.

4. Growth: Borrowing money in the form of small business loans for women allows them to expand their firms without having to wait for enough income to pay for that expansion. Women might borrow money to take advantage of opportunities and improve business growth.

5. Interest Rates: The interest rates on most business loans for women. Banks compete for clients. Thus they must give a deal that is at least comparable to what their competitors are giving. However, the interest rate is frequently lower than that of most personal loan choices.

Eligibility of Business Loans for Women

The general conditions for eligibility for business loans for women provided by financial lenders are listed below.

1. The applicant must be an Indian citizen.

2. The applicant must have a minimum of three years of experience in business, and at least five years of professional experience is required.

3. The applicant can be an individual corporation, sole proprietorship, or private enterprise engaged in selling, manufacturing, or providing services.

4. The applicant must be 21 years and above and below 65 years 

5. The applicant’s company balance sheet should show profitability.

6. The applicant must maintain accurate business accounting records.

7. The applicant’s corporation must be tax compliant

Documents required for Business loans for women

1) Loan Application: Filling out a loan application form with the right kind of information is a key step in the loan application process, no matter how intimidating it may look.

2) Age proof: Valid proof of age might be a birth certificate, a passport, a PAN card, or a voter’s ID.

3) Identity proof: Personal identity proof, such as a copy of the applicant’s passport, PAN card, voter’s ID card, or driving license, is required for every company loan, secured or unsecured.

4)Business Ownership Proof: Trade License/Sales Tax Certificate/Sole Proprietorship Declaration/Partnership Deed/Income Tax Returns with calculation for the previous two years/Profit and Loss Statement and Balance Sheet for the last two years

The company will also be expected to produce and submit a report outlining the usage and validity of the business loans for women. This process can be easily figured out with the help of an online lawyer and a business legal consultation.

Conclusion

In recent times, female business owners have broken into a variety of areas and are competing fiercely with their male colleagues. With this system of financial assistance in place, women are doing all in their power to overcome whatever stereotypes may have persisted. Women entrepreneurs should be knowledgeable about the numerous types of business loans for women that are available on the market and how to utilize them to their advantage if they want to continue developing their businesses. For this reason, it is important to understand how business works.

The process of obtaining business loans for women is very simple and straightforward. Consult a lawyer for business legal advice.

Nandita Meenakshi

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Nandita Meenakshi

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