Arranging for finance is one of the top hurdles women face when wanting to startup a small business in India. Women entrepreneurs are entitled to soft loans and many special schemes have been set up for them.

1. Funding Sources for Women Entrepreneurs
SMALL BUSINESS FINANCING
FOR WOMEN IN INDIA
By Priya Florence Shah
www.naaree.com
Page 1

2. Funding Sources for Women Entrepreneurs
Arranging for finance is one of the top hurdles women face when wanting to
startup a small business in India.
According to some reports, few women entrepreneurs in India seek big-ticket
funding from financial institutions. They depend instead on their savings,
limiting the potential to scale their businesses.
Six out of 10 women entrepreneurs started their business with a capital of
under INR 1 lakh, a majority of which used personal funds and savings were
used to start the business.
Women entrepreneurs in India find banks the most difficult source for
obtaining funds. The easiest source for getting funds for Indian women
entrepreneurs is Angel investors.
However, if you have persistence and do not want to opt for angel financing,
you can turn to a bank for a small business loans. Women entrepreneurs are
entitled to soft loans and many special schemes have been set up for them.
This report will cover
 Bank Schemes for Small Business Loans for Women Startups
 Indian Government Loans for Women Entrepreneurs and
 Angel Financing for Women Startups
www.naaree.com
Page 2

3. Funding Sources for Women Entrepreneurs
SMALL BUSINESS LOANS FOR WOMEN STARTUPS
As of 20th November, 2013, the Reserve Bank of India (RBI) directed public
sector banks (PSBs) to provide loans to women self-help groups at a rate of 7
per cent per annum so as to get the benefit of interest rate subvention scheme
under the Swarnajayanti Gram Swarozgar Yojana-Aajeevika (SGSY) scheme.
The Small Industries Development Bank of India (SIDBI) has been
implementing special schemes for women. The Mahila Udyam Nidhi (MUN)
Scheme provides equity support to women entrepreneurs for setting up
projects in Tiny Sector.
Mahila Vikas Nidhi grants loan to rural women to start ventures in the field
like spinning, weaving, knitting, embroidery products, block printing,
handlooms handicrafts, bamboo products etc. They have a number of other
schemes such as the Marketing Development Fund for Women.
In 1993, Rashtriya Mahila Kosh was set up to grant micro credit to poor
women at reasonable rates of interest, with very low transaction costs and
simple procedures.
Many schemes that are exclusively for women provide relief in terms of
collateral security and interest rates. But if the woman’s ownership in a
company is less than 50%, the benefits of women’s schemes cannot be availed.
Under Oriental Bank of Commerce’s Orient Mahila Vikas Yojana scheme, there
is upto 2% concessions and no collateral security for loans upto Rs.10 lacs and
in case of SSI no collateral security required up to Rs.25 lacs.
Under the Bank of India’s, Priyadarshini Yojana scheme, no collateral security
is required for loans up to Rs 5 lakh and for small-scale industries (SSI) units,
and there is a relief of interest rates from 0.5% to 1%.
Under SBI’s Stree Shakti Package, security is waived for loans up to Rs 5 lakh
for industrial units. State Bank of India (SBI) and Canara Bank also have
www.naaree.com
Page 3

4. Funding Sources for Women Entrepreneurs
special cells for women entrepreneurs. Besides consulting, these cells provide
training, counseling and, at times, avenues for showcasing and marketing
their products.
Canara Bank took the lead by establishing the Centre for Entrepreneurship
Development (CED) for Women. The bank has also opened exclusive branches
for women — the Mahila banking division — the first of its kind in the
banking industry.
The bankers’ perception about women entrepreneurs is that they are less
likely to become defaulters. There are lesser chances of failures in women
owned enterprises as women generally plan ahead and act more carefully
than men in business.
The disadvantages of applying for loans from banks is that the schemes only
provide minor concessions. The terms and conditions are similar to any other
consumer loans.
Women also complain that the application process is very time consuming and
requires many visits to the bank. The higher the loan amount, the more
difficult it is to avail it.
A well thought-out business plan and marketing strategy is very important in
getting approval for a bank loan.
www.naaree.com
Page 4

5. Funding Sources for Women Entrepreneurs
INDIAN GOVERNMENT LOANS FOR WOMEN
ENTREPRENEURS
The Government of India has made a number of special provisions for women
entrepreneurs under the watch of the Ministry of Micro, Small and Medium
Enterprises (MoMSME).
In the Seventh Five Year Plan (1985-90) specific attention was paid to
allocations for programmes/ schemes which directly benefited women.
The Women Component Plan (WCP) is a mechanism for identifying and
monitoring schemes that extended benefits directly to women. It was adopted
by the Government to provide assistance to women entrepreneurs.
New schemes, named Women Development Corporations, were introduced by
government to help women entrepreneurs in arranging credit and marketing
facilities.
TRADE RELATED ENTREPRENEURSHIP ASSISTANCE AND
DEVELOPMENT (TREAD)
In the Ninth Five-Year Plan, the Trade Related Entrepreneurship Assistance
and Development (TREAD) scheme was launched by the Ministry of Small
Industries to develop women entrepreneurs in rural, semi-urban and urban
areas by developing entrepreneurial qualities.
This scheme focuses on women entrepreneurs who are involved in nonagricultural activity. The Central government provides a grant up to 30% of
the project cost to Non-Government Organisations (NGOs) that promote
www.naaree.com
Page 5

6. Funding Sources for Women Entrepreneurs
women entrepreneurship. The remaining 70 percent is arranged by the
lending agency in terms of credit.
Additionally, the government also provides a grant up to INR 1 lakh for each
programme envisaged by training institutes or NGOs for providing training to
women. There is also a government-sponsored need-based grant program,
that provides up to INR 5 lakh to nationally-recognized Entrepreneurship
Development Institutes (EDIs).
www.naaree.com
Page 6

7. Funding Sources for Women Entrepreneurs
ANGEL FINANCING FOR WOMEN STARTUPS
UNITUS SEED FUND
Bangalore-based Unitus Seed Fund invests with a Profits and Values approach
in startups that primarily serve people living at the base of the economic
pyramid (or “BoP”) in India. “BoP startups” are startups that serve large, lowincome populations and that deliver social value.
They invest equity capital in promising for-profit businesses — initially only
in India. BoP comprise the 1.05 billion people in India (5 out of 6 Indians) who
live on an annual household income of less than INR 200,000 as of 2005.
Acceleration through our fund is achieved via seed funding, support and
connections, which help those entrepreneurs refine their plans, scale up their
business, and secure additional growth capital. Networking is needed to scale
those opportunities, so 95% of their mentors are local.
They explicitly state that they want to invest in female entrepreneurs because:
 Companies with the highest representation of women on their top
management teams experienced better financial performance than
companies with the lowest women’s representation.
 Research concludes that investing in mixed teams where there are
female co-founders have a greater success rate. From an investors’
perspective, having one or more females as part of the executive team
increases your odds of a successful exit.
 Traditionally women have been encouraged to go into non-profits, and
thus may be not aware of the opportunities that arise if you were to
choose the for-profit route.
www.naaree.com
Page 7

8. Funding Sources for Women Entrepreneurs
Some of the criteria which are most important to them:





Strong, experienced management team
Potential for serving up to 100,000 low-income families within 5 years
Business developed beyond the concept stage
Clearly differentiated value proposition
Strategies to build effective distribution and marketing programs
The typical initial investment sizes range from USD$50,000 to $100,000 with
the potential for additional investment capital as critical progress is achieved.
http://usf.vc/
GOLDEN SEEDS
Golden Seeds is one of the largest and most active angel organizations in the
US. Since 2005, Golden Seeds has invested $58 million in 58 companies.
Golden Seeds pursues above market returns through the empowerment of
women entrepreneurs and the people who invest in them.
Golden Seeds invests in companies with gender diverse management teams
and ownership. Typically, the companies Golden Seeds invests in have a
female founder and CEO. However, investments have also been made in
companies with women in other C-level positions.
http://www.goldenseeds.com/
www.naaree.com
Page 8

9. Funding Sources for Women Entrepreneurs
SPRINGBOARD
Springboard is a highly-vetted expert network of innovators, investors and
influencers who are dedicated to building high-growth technology-oriented
companies led by women.
Their programs and initiatives help source, qualify, advise, showcase and
support the most promising businesses seeking capital or partnerships for
product development and expansion.
They are a non-profit 501c3 organization based locally in the USA but acting
globally to accelerate women entrepreneurs’ access to growth capital.
https://sb.co/
WOMEN INNOVATE MOBILE (WIM)
The first startup accelerator focused exclusively on launching and accelerating
the growth of women-founded companies in mobile technology. Through its
network of mobile experts, mentors and investors, WIM provides women
entrepreneurs with the tools, feedback and connections needed to launch and
scale their mobile ventures.
Women Innovate Mobile is investing $18,000 in each company selected as
well as other valuable resources: feedback and guidance from mentors and
advisors, instructional programming, and design and development services
from our service providers. In return, WIM receives a 6% equity stake.
Criteria:
 Tech startups
www.naaree.com
Page 9

10. Funding Sources for Women Entrepreneurs
 A woman founder or co-founder
 Focused on building a mobile technology product.
 For the duration of the program you need to live in the area of New York
City and you must be legally in the U.S. during the program.
 Have a business model deck to show that you’ve thought through your
business in terms of what problem you’re trying to solve, the size of the
market, how you’re going to generate revenue, your competitive
differentiation, etc.
http://wim.co/
CARTIER WOMEN'S INITIATIVE AWARDS
The Cartier Women's Initiative Awards are an international business plan
competition created in 2006 by Cartier, the Women's Forum, McKinsey &
Company and INSEAD business school to identify, support and encourage
projects by women entrepreneurs.
Based on the quality of the plan and the persuasiveness of the verbal
presentation, one Laureate for each of the six regions is selected and receives
a unique and comprehensive support package: US $ 20 000 of funding, one
year of coaching, networking opportunities and media exposure.
http://www.cartierwomensinitiative.com/
CROWDHELPS
CrowdHelps is a global crowdfunding platform dedicated and geared
specifically towards women, where everybody can help change a life of a
www.naaree.com
Page 1

11. Funding Sources for Women Entrepreneurs
woman by donating funds, professional advice, free time or just supportive
kind words directly to her.
Anyone including friends, family members, or just caring individuals can
create a Fundraising Page to tell the story of an individual woman in need of
any assistance necessary or just to get the word out for any life situation.
http://www.crowdhelps.com/
www.naaree.com
Page 1

12. Funding Sources for Women Entrepreneurs
For more such reports and articles on women and entrepreneurship, visit
www.naaree.com
www.naaree.com
Page 1