Over the past several years, India has seen a favorable cultural change. Statistics show that the number of female entrepreneurs in the nation is significantly rising, with women owning about 10% of all Indian start-up unicorns.
As women-driven startups continue to grow, they are also laying the foundation for next generations of would-be female entrepreneurs. Financial institutions like ARTH are assisting women in achieving their business objectives by offering them multiple financial solutions including small business loans and insurance.
An increasing number of non-banking financial institutions (NBFCs) like ARTH now offer business loans without collateral, with low interest rates and flexible repayment plans.
Need for Women-Owned Small Business Financing
More women will be able to establish their own enterprises if they are assisted with customized loans for female entrepreneurs. It also aids in financial market diversification. The lack of funding that once prevented many women from achieving their dreams of starting their own businesses is no longer an issue.
Giving women access to small-business loans helps them realize their goals and motivates others to follow in their footsteps. By preserving the health and activity of financial institutions, it also benefits the economy.
In general, no one should give up on the idea of starting their own business due to a lack of resources. And that’s exactly the objective that these small-business loans for women seek to achieve. Many financial services for women’s microbusinesses provide a variety of these programmes, ensuring that the businesswomen have a large pool to choose from and obtain the best rates possible.
Specifications of Small Business Loans for Women
These loans’ main selling point is that they are only available to female entrepreneurs who are aiming to launch new businesses or grow current ones. These loans are made available to them at fair and alluring interest rates, with a quicker rate of acceptance, and are hassle-free. The target group also benefits from the small loans’ exclusivity as they are spared from having to contend with other business owners seeking larger loans.
The features of entrepreneurship in a business setting predominately made up of males are changing as more and more women attain economic independence and economic empowerment. Pro-women laws and a social paradigm shift are also boosting women’s businesses in India.
While obtaining a loan through a bank or an MSME fintech company like ARTH is a wise choice, many female business owners still rely on shady sources of funding. This is changing slowly and gradually, as more lenders now provide easier, speedier lending options without a collateral, when certain banks’ tight borrowing criteria may be deterrents, especially for first-time business owners with poor credit records. Here are several ways in which a business loan could help female business owners.
Unlike equity investors, banks and non-bank lenders don’t care how a business owner runs her company. For women, this is the key advantage of a business loan.
Women can handle their enterprises independently of their friends’ and families’ help by securing an unsecured business loan. Also, they are saved from the hassle of providing a mortgage on their gold jewellery or other asset in order to get credit from local moneylenders.
The vast majority of small micro finance companies provide specialized term business loans with amounts ranging from a few thousand rupees to many crores. Businesswomen can choose from a number of flexible repayment alternatives, allowing them to make EMI payments when it suits them and their company’s cash flow.
A sizeable share of the Indian financial industry is under the hands of traditional lenders. But the loan application processing time with these lenders is lengthier. They also have stringent requirements for document processing and tight borrowing rules.
New age small finance companies offer digital finance fully accessible through internet, which is a quick and safe way to finance a business, especially for first-time female company owners with a pressing need for capital but no credit history or assets to use as security.
Develop a Credit Record
If female company owners just need a little amount of funding, taking out a business loan is a great way to improve their credit ratings. The profile of the business and its credit rating are both enhanced by higher commercial credibility through a loan and its repayment on time. In the future, this may make it easier for the female entrepreneur to borrow money for bigger sums and at lower interest rates.
There are also certain tax advantages associated with business borrowing. Tax deductions are available for the interest that borrowers pay on the principal sum. The reason for this is that since the money is utilized for business purposes, the interest that is paid to the lender each month as part of the payment is viewed as a cost. The principal that is returned, though, cannot be accounted for as a cost.
Due to encouragement from the government and regulatory bodies, some of the best small business lenders now provide financing to women business owners with specialized repayment terms and lower interest rates.
Obtaining financial independence is another benefit of a business loan for women, in addition to enabling them run a business that they are passionate about.
Women don’t have to give up their valuable gold jewellery if they need to offset any business shortfalls by taking out an unsecured loan.
Thus, it is for a large number of reasons that financial services companies in India like ARTH are becoming increasingly popular by providing business loans to micro, small, and medium-sized firms.
Women entrepreneurs who need loans to expand their businesses can apply for collateral-free loans at ARTH, even if they have no property or assets. A business loan from the firm, one of India’s top NBFCs, may be approved with a minimum amount of paperwork. Many MSMEs choose ARTH because of its rapid application procedures and affordable interest rates.