27 Grants, Startup Benefits, and Small Business Loans for Women Entrepreneurs in India
Exploring the range of financial support and funding options available for women in business.
Women entrepreneurs in India face several challenges when starting and growing their businesses. One of the biggest challenges is access to funding, as many women-owned enterprises struggle to secure the financial resources they need to get off the ground or expand.
According to a report by the National Sample Survey Office (NSSO), only 14% of India’s entrepreneurs are women. Of this, nearly 80% are self-financed, and only 4.5% have received loans from financial institutions and government assistance.
These statistics, while indicative, are not to paint a gloomy picture of what lies ahead for women in the entrepreneurial landscape. There are several resources available to women entrepreneurs in India that can help them secure the financing they need to succeed.
In this article, we will discuss 27 grant and small business loans as well as other funding options for women entrepreneurs. This includes private business grants for women, federal grants, state and local grants, and women empowerment schemes. We will also discuss banks that offer small business loans for women entrepreneurs and the startup benefits available to them. Let’s begin!
Here’s how the Ministry of Micro, Small, and Medium Enterprises (MSME) defines women-led businesses: Women entrepreneurial business as an enterprise managed by one or more women owning individually or jointly a share capital of not less than 51% as partners, directors, or shareholders of the private limited company or a co-operative society.
How Do Grants For Small Business Startups Help Women Entrepreneurs?
Grants for small business startups can be a valuable source of funding for women entrepreneurs, as they do not need to be repaid. This can be especially helpful for women who may not have the collateral or credit history required to secure a traditional business loan. Grants can provide the financial support needed to cover the costs of starting a business, such as purchasing equipment, marketing and advertising, and hiring employees.
In addition to the financial assistance provided by grants, they can also serve as a source of credibility and validation for women entrepreneurs. Being selected for a grant can signal to potential investors and partners that the business has been vetted by a reputable organisation and is worthy of support.
Women Entrepreneurs Face Funding Challenges
Despite the progress made in recent years to boost the number of women entrepreneurs in India and encourage more women-led businesses, they still face significant challenges when accessing funding. According to the NSSO report, women entrepreneurs are less likely than men to receive external business funding. When they do, the amount is often smaller.
One reason for the small number of women in the startup industry is the lack of fostering and motivation from their families. Women often have to juggle their businesses, family responsibilities, and other domestic duties, which can be difficult without adequate support from their loved ones. When they don’t have enough help at home, balancing work and personal lives can be challenging, and their business ideas may not come to fruition.
Another challenge that women entrepreneurs face is a lack of networking and mentorship opportunities. Many women entrepreneurs lack the connections and support systems that can help them secure funding and grow their businesses. This can make it more difficult for them to access the resources they need to succeed.
Grants and Financial Resources for Women Entrepreneurs
There are several places where women entrepreneurs can look for small business grants and financial resources in India. Some of the options include:
Private Business Grants for Women
Several private organisations in India offer small business grants for women entrepreneurs. Corporations, foundations, or philanthropists often fund these grants. They are designed to support the growth and success of women-owned businesses. Some examples of private business grants for women in India include:
Goldman Sachs 10,000 Women: This program, run by the Goldman Sachs Foundation, provides business education and mentorship to women entrepreneurs in India, as well as access to capital and networking opportunities.
Visa IFundWomen India Grant Program: Visa and IFundWomen, a crowdfunding platform for women-led businesses, administer this grant program. It is meant for women-led businesses in India and aims to provide financial support, mentorship, and resources to help them grow and succeed. The program is designed to help women entrepreneurs overcome challenges and achieve their business goals.
Women’s World Banking: The Maharashtra government has signed an agreement with Women’s World Banking, a US-based nonprofit organisation, to train and support 5,000 women self-help groups (SHGs) in the state to become business correspondents or BC Sakhis. These BC Sakhis will provide banking services to people in rural areas who may not have access to traditional banks.
Additional Funding Support Offered by Private Business
In addition to the private business grants for women listed above, several other organisations offer financial support to entrepreneurs in general, including women. These include:
The Indus Entrepreneurs (TiE): The TiE Women’s Forum offers grants to women entrepreneurs in India through its “Women in Action” program. These grants provide financial support and mentorship to women-led businesses working to solve social and environmental problems.
The Indian School of Business (ISB): Helios & Matheson Information Technology and the ISB are working together to support social entrepreneurship projects. Helios & Matheson is creating a seed fund for these ventures and may spin off the fund as a standalone venture capital initiative. This collaboration aims to nurture and support projects with a positive social impact.
The Indian Angel Network (IAN): The IAN offers a range of grant programs for entrepreneurs in India, including the IAN Fund for Women. It aims to create the country’s largest horizontal platform for early-stage investments. The goal is to distribute the funding efficiently to help innovators navigate the challenging early stages of funding and build high-growth companies.
Federal Small Business Funding Schemes for Women
Several federal small business funding schemes for women in India are designed to support the growth and success of women-owned businesses in various industries. Some examples of federal small-business grants for women in India include:
Mahila Udyam Nidhi Scheme: This scheme, run by the Ministry of MSME, provides financial assistance to women entrepreneurs in India looking to set up small businesses. It provides a loan of up to Rs 10 lakh at concessional interest rates.
Udyogini Scheme: The Udyogini Scheme provides small business loans of up to INR 3 lakh to women entrepreneurs in India looking to set up or already running small businesses in rural areas. Their family income should be less than Rs 1.5 lakh annually, and there is no income limit for widowed or disabled women. The interest rates are subsidised and free (in some special cases). No collateral is required for taking a loan under this scheme.
Annapurna Scheme: This scheme provides a financial assistance program that provides loans of up to INR 50,000 to women entrepreneurs who want to start a food catering business, such as selling tiffins and lunches including buying kitchen essentials. The interest rate depends on the market rate and the bank providing the loan, provided a guarantor is available. One can repay the loan in 36 monthly instalments over 3 years.
The Stree Shakti Package: It is a financial assistance program designed to support women who own at least 50% of a business and have participated in Entrepreneurship Development Programs (EDPs) run by state agencies. If the loan amount is more than INR 2 lakhs, the scheme offers a discounted interest rate of 0.5%.This package is available to women who meet these eligibility requirements and want to grow their businesses.
Mudra Yojana Scheme for Women: The Mudra Yojana Scheme for Women is a financial assistance program offered by nationalized banks under the Pradhan Yojna, which provides support to women entrepreneurs who want to start small businesses such as daycare centers, beauty salons, tuition services, and tailoring units. Loans of between INR 50,000 and 50 lakhs are available under this scheme; no collateral or guarantors are required for loans below INR 10 lakhs.
The scheme has three plans:
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- Shishu: Offers loans of up to INR 50,000 for new businesses with an interest rate of 1% per month and a repayment period of 5 years.
- Kishore: Offers loans of between INR 50,000 and 5 lakhs for well-established businesses, with interest and repayment terms determined by the bank and based on the scheme guidelines and the applicant’s credit history.
- Tarun: Offers loans of between INR 5 lakhs and 10 lakhs for business expansion, with interest and repayment terms also determined by the bank based on the same factors as examined under the Kishore plan. This scheme is designed to support women entrepreneurs as they start and grow their businesses.
TREAD Scheme for Women: The Trade Related Entrepreneurship Development Assistance Scheme (TREAD) was introduced by the Government of India to support women entrepreneurs. Under this scheme, the government provides financial assistance of up to 30% of the total project value. In comparison, the bank provides the remaining 70%.
The scheme aims to make credit available through NGOs that can handle the funds responsibly and provide additional training and counseling. This scheme is designed to help poor women start and grow their businesses.
Other Government Schemes for Women Entrepreneurs
This section lists government schemes for entrepreneurs, including women entrepreneurs. Please note that these schemes do not cater to women specifically.
Prime Minister’s Rozgar Yojana (PMRY): The scheme is available nationwide and designed to help educated unemployed individuals set up self-employment ventures. It provides special concessions and incentives to all entrepreneurs but prefers women beneficiaries. There are also several concessions for women to facilitate their participation.
MSE Cluster Development Programme: The Ministry of MSME launched the program. While the contribution, in general, can vary from 30–80% for women entrepreneurs, the program generally covers up to 90% of the project cost.
Credit Guarantee Fund Scheme for MSMEs: It offers a guarantee cover of up to 75% of the loans, and the cover increases to 80% for women-owned businesses.
State and Local Small-Business Funding Assistance for Women
In addition to federal small-business grants for women, several state and local funding options are available to women entrepreneurs in India. Some examples of state and local small business funding options for women in India include
Kerala State Women’s Development Corporation: The Kerala State Women’s Development Corporation offers economic and social opportunities to women. From loan disbursement programs to women entrepreneurs to providing job-oriented training, it has benefited over 40,000 women. It provides a self-improvement loan of up to INR 20 lakhs for people having an annual family income of up to INR 1.20 lakhs in urban areas and INR 98,000 per annum in rural areas. Women having an annual household income of Rs 6 lakhs per annum can avail of a self-employment loan for up to INR 30 lakhs.
Karnataka State Women’s Development Corporation (KSWDC): The KSWDC’s Udyogini scheme offers subsidies on loans to women entrepreneurs with a family income of less than INR 1.5 lakhs. Under this scheme, if the unit cost is between INR 1–3 lakhs, a subsidy of 50% is offered on the amount. This is for women belonging to Scheduled Castes and Tribes.
For women belonging to special and general categories, the subsidy is 30%, given that the unit cost is less than INR 3 lakhs. A business’s unit cost is its total cost to manufacture, store, and sell a unit of its product/service. It is used in the financial analysis of businesses as it tells a great deal about the company’s performance.
New Swarnima Scheme: Under this scheme, women entrepreneurs can get loans of up to Rs 2 lakhs, provided their annual family income is up to Rs 3 lakhs. Women standing to benefit from this scheme are not required to personally invest in projects worth up to INR 2 lakhs. The interest rate on the loans is less than the general loan scheme.
Banks Offering Small Business Loans for Women
In addition to government loan schemes, several banks in India offer small business loans specifically for women entrepreneurs. These loans may have lower interest rates and more flexible repayment terms than traditional business loans. Some examples of banks that offer business loans for women in India include:
State Bank of India: The State Bank of India offers a range of small business loans for women entrepreneurs in India. The interest rates on loans vary depending on the woman’s business profile. The loan amount is as high as Rs 20 lakh, given that women own over 50% of shares. The bank does not ask for collateral for amounts up to Rs 5 lakhs.
Bank of Baroda: The Standup India Scheme (SUI) is a government initiative designed to provide credit to Scheduled Caste (SC) or Scheduled Tribe (ST) entrepreneurs, as well as at least one woman entrepreneur, to start new businesses (called “Greenfield projects”) in the manufacturing, services, or trading sectors. This scheme aims to meet the credit needs of these entrepreneurs and support the development of new businesses in these sectors.
Small Industrial Development Bank of India (SIDBI): This bank offers Mahila Udhyam Nidhi (MUN) to empower women entrepreneurs to undertake service, production, and manufacturing-related activities. They can avail of a loan of up to INR 10 lakhs, and the interest rates may vary. The loan repayment period is up to 10 years, with the moratorium pages up to 5 years. However, the project cost must not exceed INR 10 lakh.
Oriental Bank of Commerce: The Orient Mahila Vikas Yojana Scheme is a financial assistance program for women entrepreneurs launched by the Oriental Bank of Commerce. It provides capital for women to start small businesses, and women who own 51% of the business are eligible for the loan. No collateral is required if the loan amount is between 10 lakhs and 25 lakhs for small-scale industries. The loan has a repayment period of 7 years, and it offers a concession of 2% on the interest rate. This scheme is designed to support women starting and growing small businesses in India.
Dena Bank: The Dena Shakti Scheme is a financial assistance program offered by Dena Bank to women entrepreneurs in the agriculture, retail trade, micro-credit, education, housing, and retail and small business sectors. The scheme offers a concession of 0.25% on the interest rate. It provides loans of up to INR 20 lakhs for retail trade, INR 20 lakhs for education and housing, and INR 50,000 for microcredit. This program is designed to support women entrepreneurs in these fields as they start and grow their businesses.
Central Bank of India: The Cent Kalyani Scheme is a financial assistance program offered by the Central Bank of India to women business owners in various sectors such as small and medium enterprises, agriculture, and retail trade.
Under this scheme, loans of up to 1 crore rupees are available and do not require collateral or guarantors. There are also no processing fees, and the interest rate varies based on market rates. This scheme is designed to support women entrepreneurs in these sectors as they start and grow their businesses.
Startup Benefits for Women Entrepreneurs
In addition to grants and small business loans, several startup benefits are available to women entrepreneurs in India. These benefits can provide financial support, mentorship, and networking opportunities to help women-led businesses get off the ground and grow. One example is the Government of India’s Startup India benefits.
Startup India
Startup India is a government initiative launched in 2016 to support and promote entrepreneurship in India. The scheme has several components, including
- Tax Benefits: Startups registered with Startup India are eligible for a range of tax benefits, including a three-year exemption from income tax on profits and a tax holiday for investments made in startups by certain investors.
- Funding Support: It supports startups through its Seed Fund Scheme to help startups develop their products and services.
- Incubation Support: Startup India operates a network of incubators nationwide to provide startups with access to mentorship, workspace, and other resources to help them grow and succeed.
- Easing of Regulatory Compliance: It has made it easier for startups to comply with regulatory requirements, such as simplifying the process for obtaining patents and trademarks.
- Awareness Campaigns: Startup India runs awareness campaigns to educate aspiring entrepreneurs about the benefits of starting a business and how to access the support provided by the scheme.
Similarly, the government launched the Stand-Up India scheme, specifically for women entrepreneurs belonging to the scheduled castes and tribes. Women belonging to this category can avail a loan of up to 1 crore. However, the scheme can only be used to fund greenfield projects – the first venture started by an individual in manufacturing, agriculture, or trading industries.
Conclusion
While women have historically faced challenges in setting up businesses in the country, the landscape is slowly changing. As per a report, some 23,000 crore loan applications, worth INR 5,000 crore were sanctioned under the government’s Stand-Up India scheme in the financial year 2021–22. It said that some 1.35 lakh applications, worth over Rs 30,200 crore, were sanctioned as of March 2022 — nearly half a lakh higher as compared to the previous year.
Furthermore, several reports have seen an uptick in the number of women entrepreneurs in India. As per a NASSCOM report, women entrepreneurs rose from 8 to 13% between 2014–19 in the country. In the past five years, this number has increased by 20%, as compared to 10% for men-owned businesses. While government schemes have played an important role in providing financial assistance to women, there is still space to bridge the gap between women entrepreneurs and the resources available to them.
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