Top Business Loans For Women Entrepreneurs by The Govt of India

The decision to embark on a journey to financial independence by starting a business is inspiring. This is especially true for women entrepreneurs who, for centuries, have been conditioned to think business isn’t for them. Today, India is booming with women entrepreneurs who have proven they can talk shop. However, a lack of social and financial support can be a major hurdle in setting up and running a business. To overcome this, the Government of India has introduced various startup business loans for women that make it easier than ever for budding women entrepreneurs to achieve their dreams. This blog post covers various startup business loans for women that they can avail of to grow their businesses.

But before we dive into it. Are you a business owner who is looking for working capital to grow your business? Then you are at the right place. Velocity offers working capital up to ₹5 Crore specifically for digital-first companies. Plus, there’s no need to give up equity or secure collateral – it’s a simpler way to access the funds you need. With over ₹1000 crore disbursed and more than 1200 brands supported, Velocity has a proven track record of helping businesses like yours achieve growth through accessible financing. Find out more about our solutions here.

Udyogini Scheme

Implemented by the Women Development Corporation, the Udyogini Scheme is a Government of India initiative that offers monetary assistance to aspiring women entrepreneurs in India. Exclusively directed at women entrepreneurs, the scheme helps avail subsidized loans from private and public sector banks and leading NBFCs enrolled in the scheme. Currently, 88 small-scope industries are covered under the plan. 

The eligibility criteria for the Udyogini scheme are as follows:

• Business Loan available only for women entrepreneurs
• Should not have defaulted on any past loan with any financial institution
• The applicant with good credit score and repayment capability
• Minimum age of 18 years and a maximum of 55 years 

It must be noted that the loan limit and interest rates vary with each lender. For example, the Udyogini Scheme from Bajaj Finserv grants a maximum of INR 3,00,000 per borrower interest-free, while Saraswat bank grants up to INR 200 Lakhs at varying interest rates. As of today, the scheme claims to have empowered 44,000+ women-preneurs in India. 

Some banks and NBFCs offering business loans under this scheme include Bajaj Finance, Saraswat bank, Punjab and Sind Bank, and Karnataka State.

Stree Shakti Yojana

Launched by the State Bank of India, Stree Shakti Yojana is uniquely tailored for women who wish to become entrepreneurs or are looking to expand their existing businesses. Women who are entrepreneurs or have a shared Capital of not less than 51% as partners /shareholders /directors of a private limited company or members of a cooperative society can apply for this business loan. Here’s a summary of the scheme:

• Loan Amount for Retail Traders: INR 50,000 to INR 2,00,000
• Loan amount for Business Enterprises: INR 50,000 to INR 2,00,000
• Loan amount for Professionals: INR 50,000 to INR 25,00,000
• Loan amount for SSI: INR 50,000 to INR 25,00,000

Under the scheme, you can get loans up to Rs. 20 lakh for industrial sectors such as housing, retail, and education. The ceiling limit for micro-credit finance is Rs. 50,000. The loans in both cases are offered without charging any processing fees, and banks usually offer a 0.5% rebate on the loans. No collateral is required for loans up to ₹5,00,000. The interest rates for the above-mentioned loans will depend on the prevailing interest rate at the approval time and the applicant’s profile. However, the bank allows certain concessions on the interest of women from certain categories. 

To be eligible for the Stree Shakti Yojana benefits, the entrepreneur must meet the following criteria: 

• The loan is provided for businesses solely held by women or at least have more than 51% stake
• The business must be in the retail, manufacturing, or services sector. Self-employed women are also welcome
• The applicant must be a part of/pursuing the Entrepreneurship Development Programmes (EDP) organized by state agencies

Mahila Udyam Nidhi Yojana

An initiative by the Small Industrial Development Bank of India (SIDBI), Mahila Udyam Nidhi Yojana, aims to empower women entrepreneurs through concessional financial assistance to grow and develop their businesses. The scheme can be leveraged by MSMEs to undertake service, manufacturing, and production-related activities.

Per this scheme, the project cost must be less than INR 10,00,000. Loan limit of up to 25% of project cost, subject to a maximum of Rs. 2.5 lakh per project is offered to deserving women entrepreneurs. The interest for the same differs from bank to bank, with a maximum repayment tenure of 10 years. The respective bank charges a service charge of 1% per annum, as per the sanctioned loan. The loan can be availed for activities like beauty parlors, internet cafes, dry cleaning, and more. Additionally, no collateral or security is required to avail of this scheme.

The eligibility criteria for this scheme are:

• Women entrepreneurs who have initiated existing and new MSMEs, Tiny Units, or SSIs
• The financial holding of women entrepreneurs should not be less than 51%
• Existing or new MSMEs engaged only in services, trading, and manufacturing sectors
• MSMEs or tiny enterprises with a minimum investment of at least INR 5,00,000

Mudra Loan for Women

A part of the Pradhan Mantri Mudra Yojana (PMMY) scheme, the Mudra loan for women is exclusively aimed at uplifting and supporting women entrepreneurs in India. Per this scheme, loans up to Rs 10 lakh are provided to women entrepreneurs without collateral and with a low-interest flexible repayment tenure. As of 2019, fifteen crore loans amounting to INR 4.78 lakh crore have been distributed to women entrepreneurs through this scheme. The scheme lends out loans in three categories:

• Shishu Loan: The maximum loan amount granted to businesses in the initial stage is Rs. 50,000.
• Kishor Loan: For businesses that are already established but wish to improve services. The amount of loan granted varies from Rs. 50,000 to Rs. 5 Lakhs.
• Tarun Loan: For well-established businesses planning to expand their reach and is short on capital, they can avail of as much as Rs 10 lakh for the purpose.

The age limit for women who can avail of loans under the Mudra scheme is 65 years. The minimum age requirement is 18 years. Here’s who all can avail of Mudra loans for women:

• Group or cluster of artisans, instead of individual artisans
• Self-help groups formed by artisans, weavers, and craftsmen
• Artisans who are registered under the Development Commission (Handicrafts)
• Women entrepreneurs who have trained themselves at R-SETIS or any other prescribed institution.
• Women or men recipients of any other Govt schemes are not eligible for Mudra loan
• Women entrepreneurs who are engaged in retail trade do not qualify for Mudra loan

A nominal processing fee and foreclosure fees are charged on the sanctioned loan amount for women entrepreneurs.

Annapurna Scheme

Launched by the Government of India, the Annapurna Scheme provides financial assistance to women entrepreneurs in the food and catering industry. The total loan sanction is INR 50,000 and can be utilized for various activities like purchasing utensils, cooking equipment, office necessities, etc. The country has many active cloud kitchens today, and this scheme can be highly beneficial for them. 

The repayment tenure is three years, in which the first month of repayment is discounted for women entrepreneurs. The interest rate charged currently can go up to 12.25 % for a period of 7 years. The main eligibility criteria for this scheme are:

• The loan is provided for businesses solely held by women
• The age limit is between 18-60 years
• Should not have defaulted on any past loan with any financial institution

The State Bank of Mysore and Bharatiya Mahila Bank currently offers this scheme.

Dena Shakti Scheme

Implemented by Dena Bank, Dena Shakti Scheme is a financial assistance scheme aimed at women entrepreneurs in the agriculture, manufacturing, micro-credit, retail stores, or small enterprises sectors. The interest rate for these loans stands at 0.25% below base rates for women entrepreneurs who are the majority stakeholders in the company. 

The loan amounts for the different industries under this scheme are:

• Agriculture: INR 20,00,000
• Manufacturing, retail trader, or small enterprises (Direct and Indirect Finance): INR 20,00,000
• Retail Trader and micro-credit: Up to INR 50,000 under micro-credit schemes

The loan is granted as a combination of working capital and term loan, with a repayment tenure of up to 7-10 years.

Bhartiya Mahila Bank Business Loan

Launched with the aim of financially supporting women entrepreneurs in 2013, Bhartiya Mahila Bank (BMB) is a public sector bank that offers women entrepreneurs loans up to INR 20 Crores for working capital requirements, business expansion, or manufacturing enterprises. The bank offers multiple plans under the scheme, some of which are:

Shringaar: The BMB Shringaar loan applies to self-employed women to meet their daily business expenses. The loan doesn’t require any collateral security.

Parvarish: BMB Parvarish loan is for self-employed women or homemakers to set up daycare creches. The upper limit of this loan can be ₹1 Crore without any collateral security under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGSTSM) scheme.

Annapurna: Aimed at women entrepreneurs between 18 to 60 years wanting to start or expand their small food businesses. Note that this scheme is very much similar to the Annapurna Scheme mentioned above but differs in the way that this scheme doesn’t require any collateral. 

The following entities are eligible to apply for the loan under the scheme:

• Sole Proprietor
• Partnership Firms
• Public and Private Limited Companies
• Co-operative Society
• Minimum 2 years of work experience; in case of self-employed, minimum of 2 years of business continuity
• Minimum age of 21 years and maximum age of 60 years (loan completion age)
• Minimum take-home income of Rs. 25000/- per month

Cent Kalyani Scheme

Cent Kalyani Scheme was launched by the Central bank of India with the objective to encourage Women Entrepreneurs to start a new project or expand/modernize the existing unit. The maximum limit of loans provided under this scheme is INR 1,00,00,000. Existing and new women entrepreneurs operating in the Micro, Small, and Medium enterprises as per the MSME Act, 2006, can benefit from this scheme.

Loans under this scheme are available in four ways:

• Overdraft
• Cash credit working capital limit
• Term loan
• Non-Fund based limit (for Working capital as well as term loan)

The interest rates for loans availed under this scheme are:

• For loans up to INR 10 Lakhs: The concession in rate of interest will be MCLR (Marginal Cost of Funds based on the Lending Rate) with 0.25 % of the loan.
• For loans above INR 10 Lakhs and up to INR 100 Lakhs: The concession in rate of the interest would Marginal Cost of Funds based on the Lending Rate ( MCLR ) with 0.50% of the loan
• Additional interest concession of 0.25% will be provided if the account is rated by an External Agency.

KBL Mahila Udyog Loan

• Offered by: Karnataka Bank
• Loan Amount: Based on business requirements
• Interest Rate: As per the bank’s lending policies
• Eligibility: Women entrepreneurs, either individuals or business entities where women hold a significant stake

Karnataka Bank’s KBL Mahila Udyog Loan is designed to empower women entrepreneurs by providing financial assistance for business expansion, machinery purchase, working capital needs, and more. The scheme aims to make credit accessible to women-led businesses, helping them scale their operations without financial constraints.

Mahila Coir Yojana

• Offered by: Coir Board (under the Ministry of MSME, Government of India)
• Loan Amount: Up to 75% of the cost of machinery
• Subsidy: 75% government subsidy on the cost of coir processing equipment
• Eligibility: Women entrepreneurs in the coir sector, particularly in rural areas

The Mahila Coir Yojana is a central government initiative focused on empowering rural women through coir-based industries. The scheme provides training and financial support for women to start coir-related businesses, ensuring employment opportunities in rural areas. Women entrepreneurs receive a 75% subsidy on the cost of modern coir processing equipment, helping them set up their businesses with minimal investment.

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

• Offered by: Ministry of MSME & SIDBI
• Loan Amount: Up to ₹2 Crore
• Guarantee Cover: 75%-85% of the loan amount covered by CGTMSE
• Eligibility: New and existing women-owned micro and small enterprises

The CGTMSE scheme aims to facilitate collateral-free loans for micro and small enterprises (MSEs), including those owned by women. Under this scheme, eligible businesses can avail loans without needing to provide collateral or third-party guarantees. The government provides credit guarantee coverage of up to 85%, making it easier for women entrepreneurs to secure funding for their ventures.

Prime Minister’s Employment Generation Programme (PMEGP)

• Offered by: Ministry of MSME, Government of India
• Loan Amount: Up to ₹50 Lakh for manufacturing businesses and ₹20 Lakh for service businesses
• Subsidy: 25-35% subsidy for women entrepreneurs
• Eligibility: Women entrepreneurs setting up new micro-enterprises in rural and urban areas

The PMEGP scheme provides financial assistance to women entrepreneurs looking to establish new businesses. Women applicants receive a higher subsidy of 25%-35% on the project cost, reducing their financial burden. This scheme is particularly beneficial for women in rural areas who need support in setting up micro-enterprises.

Trade-Related Entrepreneurship Assistance and Development (TREAD)

• Offered by: Ministry of MSME, Government of India
• Loan Amount: Based on project cost
• Grant Support: 30% of the project cost as a government grant
• Eligibility: Women entrepreneurs with viable business proposals

The TREAD scheme is designed to promote women’s participation in trade and entrepreneurship. Under this initiative, women entrepreneurs receive up to 30% of their project cost as a grant from the government, while the remaining funds are provided by financial institutions as loans. The scheme also includes training and mentorship programs to enhance business skills.

Udyam Shakti Portal

• Offered by: Ministry of MSME, Government of India
• Features: Business registration, financial assistance, mentorship, and training programs
• Eligibility: Women entrepreneurs and women-led businesses

The Udyam Shakti Portal is a one-stop digital platform for women entrepreneurs, offering access to government schemes, financial assistance, training programs, and mentorship opportunities. Women business owners can use this portal to register their enterprises, apply for financial aid, and access skill development programs, making it easier to start and grow their businesses.

Economic Empowerment of Women Entrepreneurs and Start-ups by Women

• Offered by: NITI Aayog
• Support Includes: Financial assistance, business development support, and mentorship programs
• Eligibility: Women-led startups and businesses

This initiative by NITI Aayog focuses on empowering women entrepreneurs by providing them with the necessary financial and non-financial support to grow their businesses. The program offers funding, skill development workshops, networking opportunities, and mentorship from industry experts, helping women-led startups scale successfully.

Documents Required for Availing Business Loans for Women

As mentioned throughout this article, the borrower will have to submit a set of documents while applying for the loan/scheme. Though the requirements might change from lender to lender, here are a few documents that are common for all lenders:

Application form	Filled and duly signed
KYC Documents	Business entity proof, partnership deed, incorporation certificate, shops and establishment certificate, Articles of Association (AOA)
Financials	1. Projected turnover and current-year performance 2. Tax audit reports, balance sheets, profit, and loss reports, VAT returns, audited and provisional financials, etc.
Bank Statements	For the last 6 months
Photographs	Passport-size photograph of applicant/co-applicants
PAN Card	1. Of partners/directors/proprietors/promoters 2. Of the business entity
Address Proof	1. Of the business entity 2. Of directors/promoters/partners/proprietors

Startup Business Loans for Women

Starting and growing a business comes with its challenges, but startup business loans for women have made it easier for aspiring female entrepreneurs to turn their dreams into reality. With government-backed schemes and financial support tailored specifically for women, accessing capital is now more convenient than ever. By leveraging the right startup business loans for women, entrepreneurs can fund their ventures, expand operations, and achieve long-term success. If you’re ready to take the next step, explore the various startup business loans for women available and kickstart your entrepreneurial journey today.

At Velocity, we believe financial literacy is the first step to achieving greater heights for any business. In our journey to ensure every entrepreneur is fully aware of the options they have for funding their dreams, we constantly come up with crisp, informative, and enlightening content. You can check out our other blog posts on other funding sources here:

• Revenue-Based Financing – A Complete Guide
• What is Business Loan and How does it work?
• 9 Types of Business Loans in India
• What Are Unsecured Business Loans: Guide For Startups And Small Businesses
• A Comprehensive Guide to Startup Business Loan in India 2022
• 25 Most Active Angel Investors for Indian D2C Startups
• Top 10 MSME and Startup Business Loans by Government of India 2024

As we approach the end of this discussion, we just wanted to remind you that Velocity is revolutionizing access to growth and working capital for underserved Indian businesses. Through cash flow-based financing, we offer innovative, equity-free, collateral-free, and interest-free funds leveraging business data and online cash flows. Having disbursed over ₹1000 crores, we have served 1,200+ brands by fueling their growth with accessible capital. Click here to understand more about us.