Tips to get a business loan for women easily
NewsPatrolling.com : Running a small business although has its own set of challenges but also brings with it a lot of satisfaction. The satisfaction of earning your own livelihood, the joy of providing employment to numerous individuals, the joy of working towards the progress of the nation and the satisfaction of building a reputation. In India, running a small business for women had always been challenging in the face of a patriarchal mindset of the society. But still, women have fought for the recognition and respect they deserve and have finally managed to gain acceptance in the field of business. Due to the rapid economic development and the efforts of government, the number of women entrepreneurs in India has risen substantially.
But like every other small business owner, women also face the same problem, lack of funding. In order to help female entrepreneurs, state and central Government in India are offering different types of subsidies on such loans. But you must understand that although banks and financial institutions are readily offering small business loans for women to encourage economic independence, the eligibility criterion is stringent, and it requires a lot of factors going in your favour to be able to get a small business loan.
What is a Small Business Loan for women?
A small business loan for women is an unsecured loan such as a working capital loan, that is sanctioned by female entrepreneurs to help set up their own business or meet their short-term funding requirements. Women can apply for an unsecured business loan with any of the financial institutions in India for the essential purpose. The loans are sanctioned for a maximum duration of 60 months, and the rate of interest varies from 10% – 20% depending on the lender. With all lenders offering the flexibility to apply for a loan online, women entrepreneurs can apply for a business loan online as well as offline, as per their preference.
Tips for getting a small business loan for women?
Getting a small business loan for women is relatively more straightforward as compared to their male counterparts, but still, there is an eligibility criterion and application process to take care of. Here are a few tips to help female entrepreneurs get a small business loan for their venture: –
Choose a female entrepreneur specific loan
Many banks and non-banking financial institutions offer special female entrepreneur specific small business loans. These loans have flexible repayment terms and are available at concessional rates of interest. Before you decide on a particular loan option, you must conduct a thorough research and select a suitable female specific business loan.
Fortify your business venture
You must convince the lenders that your business is stable and is only going to get better in the future. There is no way to prove it other than preparing a comprehensive business plan. If required, take help of a professional, but you need to develop an elaborate business plan covering all essential aspects of your business. This would convey your seriousness to the lenders, and they are more likely to approve your loan application when you apply for an unsecured business loan.
Ensure steady cash flows
When any lender approves a loan application, one of the primary criteria that they pay attention is to the cash flow of your business. Your business should be able to generate that much cash which is necessary to meet your daily expenses as well as pay your business loan EMIs on time. If your cash flow is not steady and your accounts receivables are very high, it might jeopardise your loan application. So, you must work on improving your cash flow.
Select collateral free loans
Many financial institutions offer collateral-free unsecured business loan to female entrepreneurs for your business venture. When you do not have a collateral to hypothecate with the lender, these collateral free loans come as a lifeline. These loans are guaranteed by the government such as Mudra Loans, where you only need to pay 1% of the total loan amount as an insurance premium. It also eliminates the need to find a guarantor.
Maintain your credit score
Having a good credit score is essential for your business loan application to be approved. When you have a credit score of 750+, lenders consider your application favourably and also offer you the lowest interest rates. If due to some reasons, your credit score is below 700, then you must take professional help to repair your credit score and get it above the specified level to increase the chances of your loan application being approved.
The process to apply unsecured business loan for women entrepreneurs is very easy and requires only minimal documentation. But you must o extensive research before selecting any particular lender before you apply for a business loan online or offline.