How Small Business Loans Are Helping Women Entrepreneurs In India

Women entrepreneurs have battled for generations, both in India and other countries, due to unfavourable circumstances and limited access to financial services. Banks reluctance to put their faith in women’s commercial expertise has made matters worse.

As more and more women achieve financial independence and economic empowerment, the characteristics of entrepreneurship in a business environment dominated by men are shifting. Women's entrepreneurship in India is also being boosted by pro-women legislation and a paradigm shift in society.

Although many female business owners still rely on unofficial funding, getting a loan from a bank or non-banking finance company (NBFC) is a smart alternative. Furthermore, while some banks’ strict borrowing criteria may be a disincentive, particularly for first-time entrepreneurs with low credit ratings, many lenders provide simpler, quicker loan choices without a collateral. Here are some ways a business loan might benefit women entrepreneurs.

Financial Freedom

Banks and non-bank lenders, in contrast to equity investors, are not concerned with how a business owner chooses to manage her enterprise. The main benefit of a business loan for women is precisely that.

By obtaining a business loan, women can manage their businesses without having to rely on the support of their friends and family. Additionally, they are not required to mortgage their gold jewellery to nearby moneylenders in order to obtain credit. Instead, they could use an unsecured business loan to fund the operation and growth of their business.

Customized Tenure

A majority of lenders provide customized term business loans ranging in size from a few thousand rupees to many crores. Businesswomen have a variety of flexible repayment options available to them, allowing them to pay EMIs according to their convenience and the cash flow of their companies.

Online Facilities

Traditional lenders control a large portion of the Indian financial market. But these lenders take longer to process a loan application. They also have strict criteria for processing documents and strict borrowing conditions.

Digital finance is an option for first-time female business owners who need money urgently but lack a credit history or collateral to use as security. It is a speedy and risk-free method of business financing.

Build Credit Record

Business loans are a terrific approach for female business owners to raise their credit scores if they have very modest finance requirements. A higher level of commercial credibility raises the company's profile and raises the credit rating. This may help in taking out loans of larger amounts, and at cheaper interest rates, for future needs.

Tax Benefits

Business loans also provide certain tax benefits. The interest that the borrowers pay on the principal amount is tax deductible. This is because the interest, paid to the lender as part of the monthly installment, is considered as an expense since the money is used for commercial activities. However, the principal amount that is repaid can’t be shown as an expense.

Conclusion

Many lenders offer credit to women entrepreneurs with customized payback terms and cheaper interest rates as a result of encouragement from the government and regulatory authorities.

A business loan can help women not just with the financial requirements of their companies but also with achieving financial independence. Also, in order to cover any business shortage, women can take out an unsecured loan rather than sacrificing their priceless gold jewellery.

Lenders such as IIFL Finance offer business loans to micro, small and medium-sized businesses for a variety of purposes.

Even if a women entrepreneur with no property or assets wants a loan to grow her business, she can take out a collateral-free debt from Rs 10 lakh to Rs 30 lakh at IIFL Finance. The company, one of India’s top NBFCs, requires minimal documentation to sanction a business loan.

A quick business loan application process and competitive interest rates make IIFL Finance a popular choice for many MSMEs. The company also offers secured business loans of up to Rs 35 lakh and as much as Rs 10 crore to entrepreneurs if they have a property they can keep as collateral.