Women throughout India are breaking the glass ceiling and becoming entrepreneurs. Female-led businesses are increasingly becoming commonplace, forging a sturdy path from exception to norm. Following in the footsteps of powerful business icons like Indra Nooyi and Falguni Nayar, these women are breaking barriers across industries, easing the path for future woman entrepreneurs to follow their dreams.
Despite the progress made, there is still a long way to go. There are many stereotypes that still exist, that make it harder for a woman to lead a business. The government of India and several leading businesses are making diligent efforts to improve this, with schemes targeted at promoting and helping women-led businesses.
One of the biggest hurdles a woman faces while building a business is financing. However, in current times, several lenders are stepping up and making it easy to access Business Loans for women.
In this article, we’ll talk about how women in India can get online Business Loans to expand their businesses.
Improve Your CIBIL Score
When a lender is considering a loan application, one of the first things they look for is a credit score. This credit score or CIBIL score is calculated by CIBIL which is a credit rating agency. This CIBIL score applies to all individuals who are part of the formal financial system (they have bank accounts, etc.).
The CIBIL score is an indicator of how credit-worthy you are. The higher the CIBIL score, the more likely it is that the lender will recoup their money.
Women who are looking to get financing for their businesses can improve their CIBIL scores, which will enhance the possibility of loan approval.
There are several ways that the CIBIL score can be improved such as:
Create credit history by using different types of credit options (For example, car loans, credit card debt, property loan, etc.)
Always repay your debt on time. (For example, always pay your credit card bill before it is due).
Keep your old credit cards, since it creates a longer credit history.
Ensure fiscal prudence and discipline when you have loans to repay.
The importance of the CIBIL score cannot be overstated. Every lender relies at least partially on this score when considering your loan application. While it can take time to build up your CIBIL score, it is certainly worth it for the purpose of getting a loan.
Make Sure Your Business is Established
While a lender will be evaluating you as the applicant, they will also be evaluating your business. If you want to be taken seriously while applying for an online Business Loan, then you need to ensure that the finances of your business are in order.
When considering Business loans for women, loan professionals typically look for the following factors:
How long has the business been running?
What is the turnover of the business?
Is the business profitable?
Are there any other loans on the balance sheet?
These factors are just an indicative list. The loan professional will thoroughly inspect the finances of your business to make sure there are no discrepancies and everything is in order.
The best way to make your case for a Business Loan for women is to have a successful business. A successful business is the best candidate for further expansion.
If your business is new, then keep your operations lean, and work on the basics. Structure a feasible plan of action and have a solid business blueprint.
Use Collateral If Necessary
The best way to convince a lender to accept your loan application is to offer an adequate amount of collateral. The collateral not only convinces the lender that you can service the debt, but also signals that you’re confident in your ability to repay the loan.
Another advantage of using collateral is that you can get the loan for a lower interest rate than would otherwise be possible. The lower interest rate is because the loan is less risky for the lender, so they can accept a lower rate of return.
The collateral (or security as it is called) can be in a lot of forms. It can be business assets like machinery or office space, it can be your residential property, it can be stocks that you own, it can be jewellery, and so on.
While providing collateral, make sure that you’re willing to lose the collateral if you’re unable to service the debt. Do not take unnecessary risks with your financial well-being.
Look For Women-Specific Loan Options
Thanks to the efforts of the government and leading business executives, there are now several financing options that cater specifically to women. These loans are only given out to women in order to encourage and facilitate entrepreneurship by women. In the past, societal norms restricted women within the four walls of their homes. She wasn’t allowed to work for a living and get involved in business activities. Times have changed, and there is an urgent need to encourage and help women towards financial independence.
One of the best ways to support women entrepreneurs is to help them with their businesses. Currently, there are several schemes that are dedicated to the cause.
Some of these schemes are offered by the government itself. These include the Pradhan Mantri Mudra Yojna for Women, Annapurna Scheme, Stree Shakti Yojna, and so on.
Each of these schemes is unique and has its own parameters. You should research these schemes to find one that fits you best.
Further, private financing companies like Credit success have also joined the cause and are specifically offering Business Loans for women.
Wrapping Up
There are several Business Loans for women options available for those who want to expand their business. In case you do not get approved for a loan today, you can work on your application and apply for online Business Loan again in a few years.
