Women entrepreneurs looking to make their startup dreams a reality will agree that they face a host of challenges. This includes a male-dominated start-up landscape, challenges in begetting the best talent (and in some cases – even in this day and age – getting them to accept a woman boss). In addition, there is often the obstacle of lacking startup capital. Fortunately, at least when it comes to start-up capital, women entrepreneurs need not fret. Business loans for women and small business loans can be utilised to iron out cash flow issues that are very common in small, growing businesses.
Moreover, if you have dreams of getting your creative business idea off the ground, there is no better time than now. The world is looking towards India as a global startup capital. India reportedly has 14,000 startups (as per last year’s) count. This is a huge leap from 733 startups back in 2016-2017. Moreover, 83 of these have actually been classified as unicorns – or companies valued at over 1 billion.
To get your dream off the ground – or alternatively, to keep your brainchild in business when you need a chunk of capital to expand, grow, acquire (or simply to pay suppliers when clients are taking it easy with payments), a business loan for women could be very handy. Here are a handful of financing options that you can explore. We’re looking specifically at small business loans.
Small business finance/ small business loan
Best for: Existing businesses/ startups in motion looking for short term financing
If your startup is already registered and in business, you might be able to obtain small business finance. The eligibility criteria for these loans might in some cases present a challenge, and these differ from one lending institution to the next.
Tip: Check the eligibility criteria being used by various lenders (it is usually listed on the lender’s website) and apply for funding with lenders whose eligibility criteria you are able to meet.
Commercial business loan
Best for: Urgent requirements for long term funding
If you need a higher amount of credit and a longer repayment term, you might want to look at a commercial business loan because you can get upwards of Rs 50 lakh worth of credit from this category of loans. The repayment term can stretch from three years to five years and conveniences like prepayment (where you pay off your loan earlier than scheduled to reduce interest outgo) and higher credit linked to assets are available.
Tip: Be sure to take stock of what assets you can showcase in order to scale up your credit limit.
Government loan – Pradhan Mantri Mudra Yojana
Best for: Startups and companies looking to expand, with a need of Rs 50,000 to Rs 10 lakh.
The PMMY scheme actually offers three different tiers of loans depending on where you stand at the business lifecycle: Shishu for nascent businesses/ startups; Kishor for somewhat established businesses and Tarun for businesses that are in the swing of things.
Tip: Look up the Mahila Udhyami Yojana under the same scheme – if you qualify, you stand to receive a 0.25% discount on interest.
Loan against securities
Best for: Women with a good chunk of investments to their name
Some women might actually have startup capital by way of their own investments, but they might not want to pull these out. The good news is that you can have your cake (capital) and eat (use) it too. The securities can act as collateral, based on which you can opt for a loan from a bank or NBFC.
Tip: Do the math in advance and if possible choose a time when the markets are on an uptrend – you’ll get a maximum of 60% to 70% of the value of your investments.
Become a part of India’s amazing startup story. Make your mark on the business landscape. You can get a loan with minimal hassle and complete professionalism from many lenders who give you up to 5 years to repay your debt.