Secrets of Small Business Loans for Women Entrepreneurs in India

A business loan is a financial tool that helps the business owner meet a financial crisis. A commercial loan is another term for a business loan. These days, a business loan for women has played a vital role in offering financial support to women entrepreneurs running small businesses.

Further, many private enterprises, self-employed individuals, partnership businesses, and sole-proprietorship organisations can opt for this business loan anytime.

Different types of small business loan for women

Running a business requires financial assistance besides plenty of hard work and dedication. If a woman borrower is in desperate need of financial support, she can take a business loan. Below is a list of the different types of business loans women entrepreneurs can opt for:

  • Term loan

A term loan is considered one of the most popular business loans. It is classified into short-term and long-term loans. The period for repayment of a short-term loan ranges between 1 year and 5 years. While for a long-term loan, it is from 10 years to 20 years. Women entrepreneurs running a small business can avail term loans to meet business needs.

  • Working capital loan

Various business enterprises opt for working capital loans to cope with their regular business needs, flourishing the business, buying raw materials, improving cash flow, inventory development, hiring employees, etc.

These are usually short-term loans with a repayment period of up to 1 year. In addition, the borrower doesn’t need to pay any security to the bank while taking the loan. As a result, the interest rate is comparatively higher than general business loans.

  • Business loan for women

A few financial institutions in our country offer special credit facilities to women called business loans for women.The Indian Government also plays a vital role in motivating women to start small to medium-scale businesses. Women’s specialised loans include start-up assistance, flexible, discount on interest rates, etc. Women entrepreneurs can check the various types of business loans available for them to boost their finances.

  • Letter of credit

Letter of credit is the small business loans provided to business enterprises by the lender or bank for international trade. Women entrepreneurs take advantage in both export and import purposes. Further, while doing foreign trade, business organisations need the assurance of payment before approving the trade agreement. Under such circumstances, a letter of credit solves this problem.

  • Start-up loan

This is beneficial for the new business companies. Often, due to some unavoidable circumstances, borrowers may not possess a proper credit history. Hence, to decide whether the organisation is eligible to take a loan, the lender verifies the borrower’s credit profile alongside his/her company’s. Then, the loan amount is decided based on present turnover.

In addition to the above, financial institutions offer pre-approved facilities that boost the lending process. They provide these offers on various financial products like business loans, personal loans, and more.  Applicants can check their pre-approved offers by inserting details like their names and contact numbers.

Documents required for business loans for women

Following are the documents required by women for a small business loan. They are as follows:

  • ID proof (includes PAN card, Aadhaar card)
  • KYC documents (includes business entity proof, partnership deed, incorporation certificate)
  • Address proof (includes electricity bill, Aadhar card or address proof of the business entity)
  • Financial documents (includes bank statements, copy of GST returns)
  • Proof of business ownership (registration documents of business)

Nowadays, offering small-scale business loans for women has become very popular. Choosing this loan will be ideal, especially for small business owners while facing drawbacks due to financial shortages.It will not only enlarge the business but also secure its future. However, there are some factors that women entrepreneurs need to know about financing business. These will help them to make a complete financial strategy according to their business plans.