MSME Funding: 3 Schemes for Women Entrepreneurs in India

Women Entrepreneurs in India

The MasterCard Index of Women Entrepreneurs (MIWE) ranks India 52nd out of the 57 countries with the most women entrepreneurs in the world. However, it is important to know that only 14% out of the 58+ million entrepreneurs are women.

According to the McKinsey Global Institute, empowering women entrepreneurs is one of the ways to improve a country’s GDP. A 2015 study conducted by this organisation found that the GDP could rise by 16% to 60% if women had equal shares in the economy as men.

The government and lending institutions in India have introduced several schemes to help women to find the right sources of working capital to establish their own business.    

Few lucrative schemes that are currently available for women entrepreneurs are:

Stand-Up India

The Stand-Up India scheme offered by the Government of India facilitates every private and public financial institutions to provide loans to at least one woman and one SC/ST individual above the age of 18 years. Beneficiaries have to hold at least 51% share in a business in case of a partnership or non-individual entity to avail a loan.

This scheme provides loans ranging from Rs. 10 Lakh to Rs. 1 Crore for setting up of only Greenfield businesses. It will finance up to 75% of the total project cost. Beneficiaries can avail the rest 25% through any other Central or State Government schemes. However, they have to invest at least 10% of the project cost themselves at all times.

The maximum repayment tenure for this loan is 7 years. Beneficiaries also get a moratorium period of 18 months. They also enjoy the lowest business loan interest rate with this scheme. 

MUDRA loans

MUDRA loans provided by the Pradhan Mantri Mudra Yojana (PMMY) is another product benefiting women.

This scheme can be further divided into: 

  1. Traun – Loans between Rs. 5 Lakh and Rs. 10 Lakh.
  2. Kishor – Loans between Rs. 50,000 and Rs. 5 Lakh.
  3. Shishu – Loans up to Rs. 50,000.

Unlike Stand-Up India, the MUDRA scheme offers loans to both new and existing businesses.

This business loan for women is collateral-free and helps boost your finances. In case of default, the lenders are covered under the Credit Guarantee for Micro Units (CGFMU) while disbursing such advances. However, the asset created by this loan is hypothecated to the lender. 

The maximum tenor for these loans is 5 years with a moratorium period of 6 months. Beneficiaries also receive the lowest interest rates. This scheme also provides a MUDRA card that acts as a credit card to provide loan overdraft facility. 

According to the Government, 75% of the 14 Crore MUDRA loans processed went to women entrepreneurs.

TREAD (Trade Related Entrepreneurship Assistance and Development) scheme

To promote women entrepreneurs, the TREAD scheme was launched by government of India. The overall scheme is split into 3 major components. Under this scheme women got trained and consulted on specific business projects from different NGOs and training centres and on the basis of their project requirement, they informed. The scheme also offers the women entrepreneurs up to 30 percent finance of the total cost of project as government grant. After that NEDI (National Entrepreneurship Development Institutions) offers financial grant of upto Rs.5 lakh on need based.

Mahila Udyam Nidhi Scheme

Mahila Udhyam Nidhi Bank is one of the important financial steps taken by SIDBI for women entrepreneurs from India. If a woman wishes to start up a new venture at small scale, she can avail up to Rs. 10 lakh business loan under this women empowerment scheme. The scheme offers financial assistance also for those women looking for moderation for their old businesses. The loan will be offered by SIDBI on a five years moratorium period. However the interest rates will be according to the rates offered in the market.

Mahila Udyam Nidhi

The Mahila Udyam Nidhi is a business loan for women offered by the Small Industries Development Bank of India (SIDBI).

Beneficiaries avail 25% of the loan amount as subsidy. Out of the remaining 75%, 65% comes from this term loan and the rest 10% from the borrower. This scheme provides loans up to Rs. 10 Lakh.

Beneficiaries of this loan are from:

  • Manufacturing and production sector with investment in plant and machinery not exceeding Rs. 25 Lakh.
  • Services sector with investment in equipment not exceeding Rs. 10 Lakh.

Loans under Mahila Udyam Nidhi are collateral-free; assets created out of this loan are hypothecated to the bank.

You can also opt for a Business Loan for Women from NBFCs if you don’t qualify for any of these schemes mentioned above.

The company provides the following features:

  • Loans up to Rs. 30 Lakh.
  • Repayment tenors up to 96 months.
  • Quick approval within 24 hours.
  • No collateral required.

Make sure to fulfil all the business loan eligibility criteria when applying. Also, ensure you have a high CIBIL score as it has several effects on your business.  

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