Government Loan Schemes for Women Entrepreneurs

The Indian economy has been growing at a steady pace over the last few years. One of the major reasons behind this sustained growth is the increasing number of women in the workforce. The participation of women in the formal sector has seen a steady increase over the last few years. Still, there is a lot left to be done. This is where the role of the government becomes important. The latest push from the government has been to encourage women entrepreneurship and make them job creators.

To facilitate and empower women to set up their businesses, the Government of India, as well as various state governments, have announced various Business Loan schemes over the last few years. Following are the major Business Loan schemes for females offered by the government authorities for females through various financial institutions: –

1. Mudra Yojana

Mudra Yojana has been helping aspiring entrepreneurs to set up their new small businesses through financial assistance in the form of business loan. In recent years, the focus of Mudra Yojana has been on encouraging female entrepreneurs. Women who are interested in setting up small enterprises such as catering businesses, tailoring, beauty parlour, etc. can avail this facility. Mudra loans are unsecured and do not require any collateral or guarantor as the government insures them. The maximum amount available as a Mudra Loan is Rs. 10 Lakhs. Female co-operatives are also eligible to apply for a business loan. Business Loan under Mudra Yojana is offered by banks, NBFCs, and microfinance institutions.

There are three types of Mudra Loans: –

• Shishu: – Loans up to Rs. 50,000 are categorised as Shishu.
• Kishor: – Loans between Rs. 50,000 up to Rs. 5,00,000 are categorised as Kishor.
• Tarun: – Loans between Rs. 5,00,000 up to Rs. 10,00,000 are categorised as Kishor

Mudra loans generally have a maximum repayment tenor of up to 5 years, which depends on the discretion of the bank. Moreover, Mudra loans are available for the expansion of existing businesses as well.

2. MahilaUdyam Nidhi Scheme

If any female entrepreneur wishes to set up a new venture or wants to expand an existing venture, then they can seek assistance from Small Industries Development Bank of India (SIDBI) under the Mahila Udyam Nidhi Scheme. 

SIDBI offers financial assistance of up to Rs. 10 Lakhs to female entrepreneurs for new as well as existing business ventures. The maximum repayment tenor provided is 10 years (including a moratorium period of 5 years). Interest rates are decided based on prevailing government policies as well as the credit profile of the borrower.

3. Stree Shakti Package for Women Entrepreneurs

Business loans and other concessions are offered to female entrepreneurs under this scheme from government agencies. To be eligible for financial assistance, the women applicant must have a majority stake, i.e., above 50 percent in a small business venture. Also, she must be enrolled in the Entrepreneurship Development Programmes which are organised by the state agencies in different states. Some of the major aspects of the Stree Shakti scheme are: –

• The maximum amount available as financial assistance under this scheme is Rs. 20 Lakhs.
• In case the loan amount is below Rs. 5 Lakhs, then no collateral is required.
• If the loan amount is above Rs. 2 Lakhs, there is 0.5% concession available against the interest rate.
• Margin requirements are also reduced by 5%

4. TREAD Scheme (Trade Related Entrepreneurship Assistance and Development Scheme)

Instead of offering just financial assistance, the TREAD scheme offers all-round assistance to women entrepreneurs. Applicants are trained in various aspects of the business, including training, counselling, information gathering, and financial assistance. Applicants who are admitted under this scheme need to get their project appraised by approved financial institutions. Afterward, government grants will cover up to 30% of the project cost, and the respective financial institution will finance the remaining 70%.

5. Bhartiya Mahila Business Bank Loan

The government launched this scheme through the Bhartiya Mahila Bank to offer financial assistance to women entrepreneurs involved in manufacturing businesses. Later, the Bhartiya Mahila Bank merged with the State Bank of India, but the scheme still provides business loans to women. The following are the major aspects of this scheme: –

• The maximum loan amount available under this scheme is Rs. 20 crores and is only available for manufacturing businesses.
• Loans amount of up to Rs.1 crore do not require any collateral and are covered by the Credit Guarantee Fund Trust for Micro and Small Enterprises.
• The maximum repayment tenor under this scheme is 7 years.

6. Udyogini Scheme

Women entrepreneurs who are engaged in agricultural activities or similar small businesses are offered business loan under the Udyogini scheme. The major motive of this scheme is to make women self-reliant and free them from the clutches of money lenders. Moreover, skill development training is also offered to women to help the progress in their venture and contribute to the growth of the economy. The major aspects of the Udyogini scheme are: –

• The maximum loan amount available is Rs. 1 Lakh but can vary according to the policies of the respective state governments.
• The applicant must be between the age of 18 to 45 years and should be involved in agriculture or other small business.
• Annual household income of the female applicant should be below Rs. 1 Lakh to be eligible.
• The household income limit is waived off for disabled, widowed, or destitute women.
• For disabled, widowed or destitute women from SC/ST category, a subsidy of 30% of the loan amount is also offered, subject to a maximum of Rs. 10,000.

Apart from the schemes mentioned above, several other government loan schemes are available for female entrepreneurs who are offered through banks as well as microfinance institutions. These government business loan schemes have been created exclusively for the convenience of female entrepreneurs and are playing an important role in boosting female entrepreneurship.