Business Loans For Women? Here Are 16 Options In Funding For Women Entrepreneurs In India!

What is stopping the women in the country from achieving the best of their entrepreneurial acumen? The reasons are many. Limited access to external funds and business networks along with not enough funding for women entrepreneurs remain major challenges to growth, say many high potential women entrepreneurs about these business loans for women. These women entrepreneurs who through job creation and widening of markets can boost economic growth, remain a rarity, though over a 10 year period (2000-10), the number of self-employed women (many working in low-skilled jobs from home or as street vendors) has doubled to a crore.

The stifling gender bias that cripples Indian society has not spared the entrepreneurial ecosystem of the country as well. One look at the global Female Entrepreneurship Index of the last two years, compiled by the Washington based Global Entrepreneurship and Development Institute (GEDI), confirms that funding for women entrepreneurs in India is needs to be better.

In January 2016, the entrepreneurial ecosystem of India received a significant boost with the launch of the Start-Up India scheme. Further incentives focusing exclusively on Women and SC/ST entrepreneurs were added by instigating the Stand Up India scheme in April. Despite these efforts to make India Inc inclusive, options for business loans for women in India still remain less than that for their male counterparts.

What is the outlook on business loans for women entrepreneurs in India? What sources of funds exist today, and what support can we expect in the next few years for worthy start-ups led by women? While the above challenges are real, there are many govt and non-govt schemes for business loans for women entrepreneurs, which we will speak of in this piece. 

How gender stereotypes matter in funding for women entrepreneurs

As per the 2014 GEDI Report quoted above, in most business sectors, women are marginalised by the ‘macho culture’ and are excluded from ‘buddy networks’. Women entrepreneurs therefore remain limited to a few sectors, and we rarely find many of them venturing into other sectors like technology, science or finance.

Business loans for women entrepreneurs from banks and the government 

The biggest deterrent for women entrepreneurs in India remains their lack of access to funds.  for women entrepreneurs through formal sources such as bank loans remain extremely limited. 

A report released by the International Finance Corporation in 2014, states that the total supply of formal finance to women-owned micro, small and medium enterprises (MSMEs) was around Rs. 2.31 lakh crore during 2012 – resulting in a finance gap of Rs 6.37 lakh crore or 73% of the total demand. Ainsley Lloyd, researcher at GEDI, points out that lack of collateral and a misogynist mindset are the main stumbling blocks women face in accessing loans.

Unreasonable hidden bias against funding for women entrepreneurs in Venture Capital firms

The gap in women’s access to venture capital is even wider. According to a report by YourStory, 670 funding deals worth $2 billion were closed in the first eight months of 2016. Only a mere 3% of these deals were bagged by start-ups with women founders. India lacks large-scale women-oriented venture capital funds or institutions, like Golden Seeds in the US which provide customized offerings to women entrepreneurs such as collateral-free loans and invest exclusively in women led enterprises.

Thus, most women entrepreneurs have to rely on personal funding, especially in the initial stages. A Karnataka-centric 2014 report titled ‘Strengthening Her Enterprise’ confirms that over 90% women entrepreneurs have to rely on personal funding or on funding from friends and family networks even to meet their working capital requirements.

Though Venture Capital firms deny being gender biased, many women entrepreneurs feel otherwise. Leading women entrepreneurs of India agree that there is a predominant notion prevailing among investors that women are more likely to prioritise their personal life, when the need arises. Hence, enterprises with male founders or co-founders gain preference over those with only women at the helm.

Investors also doubt women’s ability to build scalable startups. There is a fear amongst investors that women’s priorities change overtime and when they have to choose between family and business, it is the latter which gets dumped. Preconceived patriarchal ideas paralyse the venture capital milieu of India and marginalise the prospects of a woman entrepreneur in the country.

But, things are slowly changing

The good news is that gradual changes are on their way. The success and career trajectory of some successful women entrepreneurs such as Richa Kar of Zivame, Swati Bhargava of CashKaro, and Radhika Aggarwal of Shopclues, are gradually dispelling arguments against women’s entrepreneurial prowess, and thus opening up possibilities for other aspiring women entrepreneurs.

Investors are gradually opening up their resources as business loans for women owned enterprises. Though not many, but some funding sources, both government and private, which focus exclusively on women, have been initiated in the recent past. Here, we have tried to compile some of the significant funding sources which give wind to the wings of our women in business.

Bank and Government funding business loans for women

The Government and formal institutions such as public and private sector banks remain one of the major sources of funding for women entrepreneurs in India. The nationalised banks of India have been unveiling a slew of attractive lending schemes for women entrepreneurs in a bid to promote entrepreneurship among women.

Here is a list of some of the most significant bank loan schemes which are designed to support the women entrepreneurs of the country.

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This exclusive article about funding for Indian women entrepreneurs explains the following:

• How do gender stereotypes affect funding decisions for women-run organizations and businesses?
• What are some significant bank loan schemes that support women entrepreneurs?
• Details of the Government’s Stand Up India scheme that supports SC/ST women entrepreneurs.
• Handy details of some Venture and Private capital sources of funding that have significantly invested in women owned businesses.

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