Empowering women entrepreneurs is crucial for the country’s economic development. The Indian government has been working with financial institutions to launch numerous financial schemes for women who want to start or grow their businesses in the country. Since capital is crucial for business success, many NBFCs have found specialized business loans for women.
If you are a female entrepreneur looking for funds to support your business, apply for a business loan to gain economic and financial independence. Many NBFCs offer unsecured business loans with competitive interest rates, the sole purpose of which is to give financial support to female entrepreneurs. Don’t know how to avail of a business loan for women in India? Here is a step-by-step guide.
Step by Step Guide to Avail Business Loans for Women:
- Evaluate Your Requirement
First of all, you need to decide if you actually need a loan and how much you must borrow. The Indian government has eased its lending policies for women entrepreneurs. As a result, financial institutions offer generous loan amounts to prospective borrowers. However, that doesn’t mean you must borrow all that you qualify for.
After all, over-borrowing will not help you much since you need to repay it along with the interest rate. The higher the loan amount you borrow, the more interest cost you will need to pay. Therefore, assess your requirements and borrow the minimum amount required for your expense.
- Check Your Credit Score
The credit score is one of the most crucial parameters that lenders consider while evaluating your eligibility and determining your business loan interest rate in India. Your credit score indicates your repayment history, credit length, portfolio diversity, and other credit-related activities. The higher your credit score is, the higher the loan amount you may avail yourself of at a lower interest rate.
Therefore, check your credit rating and ensure that you meet the lender’s requirements before applying for a Business Loans for Women.
- Check Your Eligibility
Any woman who is involved in the following professions is eligible for a business loan:
- Self-employed professional, including CA, CS, architect, doctor, etc.
- Self-employed non-professional, including retailer, trader, manufacturer, proprietor, service provider, etc.
- An entity, including private limited company, partnership, limited liability partnership, closely-held limited company, etc.
If you are involved in any of the professions mentioned above, there are other eligibility conditions that you must fulfill. For instance, you must be 22-65 years of age at the time of loan application and term-end. Besides that, you must be running the current business for the last three years, with a minimum turnover, income, and profits set by the lender. The lenders also consider your total business experience while approving your loan.
- Gather the Required Documents
NBFCs have simplified documentation requirements for women entrepreneurs, which include the following:
- Identity proof like driving license, Aadhaar card, and PAN card
- Residence proof like passport, voter ID card, driving license, ration card, electricity bill, etc.
- Income proof, like the latest ITR with income computation, profit & loss account, and balance sheet for the last 2 years (certified by CA)
- Last 6 months’ bank statements
- Proof of continuation, like ITR/Trade license/Establishment/Sales Tax Certificate
- Other documents, like Board resolution, a certified copy of the Memorandum & Articles of Association, and a certified copy of the Partnership Deed or Sole Proprietorship Declaration
- Select the Repayment Term
NBFCs offer the flexibility of repayment to make things easier for female entrepreneurs. Once you receive the loan amount, the lenders give you the flexibility to select your repayment tenure suitable to your repayment capacity. They distribute your principal amount and interest cost into equated monthly installments so that the loan does not become a financial burden on your business.
An online business loan EMI calculator is available on every lender website. Select a loan term with EMIs you can easily afford. However, remember, the longer the loan term you choose, the higher interest you will pay. Therefore, choose the shortest possible tenure according to your budget.
- Complete the Application
Once you finalize your loan amount and repayment tenure, check your credit score and eligibility, and gather the required documents, complete the application procedure to begin loan processing. Read the fine prints carefully and clear all doubts before signing the loan agreement. Ensure that the lender you choose offers the lowest business loan interest rate in India and offers excellent customer service. Make a robust repayment plan to stay consistent with your EMI payments. Over time, you will see your business growing and your credit score improving.
Indian women do a lot of hard work and face many difficulties to build their businesses. Respecting their determination, many NBFCs offer lucrative Business Loans for Women in India to support their business growth and expansion. With financial support by your side, you can achieve your business goals and succeed while leaving behind your competitors.