The small and medium enterprise sector in India contributes to over 45% of India’s industrial output, forming 40% of the GDP output1. A small part of this output is also contributed by women entrepreneurs.

According to the Sixth Economic Census released by the Ministry of Statistics and Programme Implementation in July 2018, women constitute only 14% of total entrepreneurs in India – that is, 8.05 million out of the total 58.5 million. The reason for this low percentage is that women face a lot of social stigma when it comes to starting a business.

Also, at the lower end of the economic strata, women are raised with an expectation to pursue household duties and denied requisite educational and networking opportunities critical for starting a business. In addition, there are other challenges faced by women entrepreneurs in India, such as:

  • Safety and security: Entrepreneurship involves working odd hours and travelling to remote places women therefore tend to be more wary of pursuing opportunities in the face of risks to one’s personal safety and security.
  • Personal commitments: Women are often responsible for managing the household, in addition to running a business, and this puts them in a difficult position when it comes to devoting time for growing the business.
  • Assertive peer behaviour: Women entrepreneurs tend to face aggressive behaviour of peers and this proves detrimental to a woman trying to succeed as an entrepreneur.

Several of these challenges will take time and societal shifts to fix. However, the good news, is that there are areas like financial services and training initiatives that can provide much needed impetus to women entrepreneurs.

Business Loans for Women

Not so long ago, women entrepreneurs found it hard to get finance for their business due to prevailing social assumptions. But with the advent of fintech platforms, new doors to opportunities have opened for aspiring women entrepreneurs. These platforms have enabled self-employment for women in both urban and rural India.

Benefits of Business Loans for Women

Business loans help women entrepreneurs streamline business operations, production processes, eliminate cash-flow disruptions and expand to new markets. It also empowers Indian women to challenge social norms and become economically independent. And with economic independence comes social value and financial growth. 

Financial growth also tends to attract investors and partnerships for a business enterprise, thereby enabling a future full of exciting opportunities. This infuses confidence to interact with fellow business owners and work with big clients.

With the right kind of financial help women can:

  • Put their plans into action by grabbing opportunities that come their way
  • Be their own boss by retaining control of their enterprise and keeping the valuable assets protected
  • Reduce cash-flow risks by bringing order to the working capital fund
  • Build credibility and goodwill for business

Government Schemes for Developing Women Entrepreneurship

A big part of setting up a business is making capital available. And to help aspiring women entrepreneurs realise their dream, the Government of India offers several schemes. A brief summary of 7 such schemes is presented below:

1. Shringaar and Annapurna

Bhartiya Mahila Bank (now a part of the State Bank of India) offers several loans namely, Shringraar (for beauty salons, spas), Annapurna (for food catering business), Parvarish (for day care centres) and Kitchen Modernisation Loan (for maintaining and upgrading the kitchen). The more popular ones being Shringaar and Annapurna:

  • Women between the age of 20 to 60 years are eligible to apply for collateral-free loan under these schemes
  • For the Shringaar loan scheme, the maximum loan amount offered is up to Rs 10 Lakhs and for the Annapurna scheme it is up to Rs. 50,000.
  • For the Shringaar scheme, the loan tenure is 7 years and for the Annapurna scheme the tenure is 3 years
  • Shringaar scheme partners with Naturals, Cavin Kare and Lakme

2. Stree Shakti

Introduced by the State Bank of India during 2000-01, this scheme caters to women who own businesses. It offers collateral free loans of up to Rs. 5 lakhs.

  • To avail this loan, women need to own at least 51% of the business
  • Any woman can avail a loan of up to Rs. 50 lakhs
  • The tenure changes basis the loan amount

3. Orient Mahila Vikas Yojana Scheme

Launched by Oriental Bank of Commerce, Orient Mahila Vikas Yojana offers loans to women for starting a business on their property. This is a collateral-free loan ranging between Rs. 10 to 25 lakhs.

  • This loan is offered to women who hold a 51% share capital of their property
  • The loan has to be repaid within 7 years

4. Dena Shakti Scheme

Dena Bank’s Shakti Scheme is for women entrepreneurs who need financial assistance in the field of agriculture, manufacturing and other small businesses. Herein, loans of up to Rs. 20 Lakhs are sanctioned for education, housing or retail trading and loans of up to Rs 50,000 are offered under the category of micro credit.

  • Women entrepreneurs with more than 50% ownership of a business can apply for the Dena Shakti Scheme
  • The repayment tenure is flexible, lasting up to 10 years

5. Udyogini Scheme

This loan scheme launched by Punjab and Sindh Bank is for women in the field of agriculture and other small businesses. The maximum loan amount is Rs. 1 lakh depending upon the family income.

  • The loan is available to women between 18 to 45 years of age
  • For widowed, destitute or disabled women, and women belonging to the SC/ST category, a subsidy of 30% of the loan is provided; for women belonging to the general category, a subsidy of 20% of the loan is provided
  • Loan repayment tenure varies based on the loan amount

6. Cent Kalyani Scheme

Launched by Central Bank of India, this loan scheme is ideal for women managing SMEs, involved in agricultural work or engaged in retail trading. Under this scheme, loans of up to Rs. 1 crore are sanctioned so as to promote sustainable employment opportunities for Indian women.

  • No collateral or guarantors are required
  • Loan repayment tenure is up to 7 years

7. Mahila Udyam Nidhi Scheme

Launched by Punjab National Bank, this scheme helps women set up new projects. Under this scheme, different plans are offered for the purchase of auto-rickshaws, beauty parlours, day care centres, etc. Loans of up to Rs. 10 Lakhs are sanctioned.

  • Repayment tenure is up to 10 years

Source: 1 MSME Annual Report, 2017-18