Top 5 business loan options for women entrepreneurs.

India is a developing country where there are countless opportunities for growth and attracts a lot of investors from foreign countries. While men in the past mostly ruled the world of business start-ups and entrepreneurship. The industry has witnessed an increase in the number of women turning in entrepreneurs and getting started with their business. Many of them are now ditching their high-income jobs, while others are stepping out of their household boundaries, to explore their entrepreneurship skills and hopefully run a successful business.

A significant reason for the rising number of women in the start-up ecosystem is the availability of business loans for women. From financial institutions to government schemes, offer different types of business loans that can help women entrepreneurs with their finances and running their business. They just need to fulfill the basic business loan eligibility to avail the loan with ease. Here are five of the top business loan options for women entrepreneurs.

Small Business Loan

Numerous banks and NBFCs offer different types of small business loans. A popular option for small to medium-scale female entrepreneurs funding is LOC or Line of Credit. To apply for this loan the lender determines the applicant's eligibility which will ultimately decide the maximum LOC amount. You can then borrow money from the lender up to this maximum credit limit. While repaying the loan, you will only be required to pay interest on the amount you actually used and not on the entire credit limit. New, as well as existing businesses, can use this option.

Commercial Business Loan

Commercial business loans are generally ideal for medium-scale businesses wanting to expand their operations and looking to borrow more than what SME loans generally offer. This type of business loan for women does not require any security, and some lenders also offer instant online application and approval facilities. Some lenders also offer prepayment facilities with the help of which you can repay your loan before the tenure to reduce the interest rate.

Loan Against Securities

With this option, you can pledge your investments in the stock market, mutual fund, or life insurance policies and borrow a loan against the same. This type of loan gives you the freedom to use the loan amount as per your requirement. Financial institutions generally offer loans of up to 60%-75% of the market value of your investment as a loan with this option. As this is a secured type of loan, the interest rate is generally lower than most other business loan options. These too, are usually short-term loans available for up to 4-5 years.

Personal Loan

A personal loan is an unsecured type of loan which does not require you to pledge any security against the loan amount. Personal loans are offered based on the applicant's eligibility, including their monthly income and credit score. Even if you are a homemaker with no professional experience, you can avail a loan. However, if you are considering a personal loan as a business loan for women in India, you do get the option to add a co-applicant like your spouse to increase your eligibility. One of the most significant benefits of a personal loan is the fact that it is the most flexible type of loan which you can use for any of your personal or professional requirements.

Government Schemes

The government has come up with multiple finance schemes for entrepreneurs. The Pradhan Mantri Mudra Yojana is a scheme that has three different loan options- Shishu, Kishor, and Tarun for start-ups as well as existing businesses looking to grow their business further. Another scheme like the Women Enterprise Program or Mahila Udyami Yojana helps women entrepreneurs get an interest discount of up to 0.25% on their business loans. Equipment Finance Scheme, Credit to Micro Enterprises, Mudra Card, and Refinance Schemes from Bank are some of the other important aspects of the Mudra Yojana to help female entrepreneurs.

Whether you want to start a home-based business or are aiming for a full-fledged business with a nation-wide presence, consider all the different options listed above and select one that best suits your requirements.

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