Let’s continue our focus on women entrepreneurs this week. Women entrepreneurs are missing from the startup story. The central government’s ambitious Startup India, Stand-up India initiative has failed to attract women entrepreneurs. Only 43% of the 27,084 recognised startups in India had a woman director as of 8 January, according to the Economic Survey 2019-20.
When we peep into the factors responsible for keeping women away from entrepreneurship, it comes to the fore that women have no risk covering possibility financially, besides they lack credit support. There is lack of institutional support system for first timers so even at smallest obstacle they give up.
Women are missing in the Startup India initiative because many women, who start their initiatives, are not in the limelight or mentored professionally. Additionally, when it comes to funding, women are not only scrutinized about how they’d manage their businesses, but also their families in parallel, which isn’t a filter men are put through. Thus women need to break through to filters to raise capital and grow their businesses.
A recent research paper released by Observer Research Foundation (ORF), a public policy think tank, argued that the low women entrepreneurship rates are part of a broader gender gap in economic participation and opportunity.
The paper titled, “Women Entrepreneurs in India: What is holding them back?”, observed that policies aimed at including more women in senior and leadership positions are needed, which will help them gain experience and knowledge, which in turn will enable them to start their own businesses.
Women in rural areas, especially, are a potential gold mine when it comes to entrepreneurship and must be encouraged through skilling and handholding.
Let’s understand, much of a business woman’s drive to pursue entrepreneurship is due to the immense passion she has for her work. Another motivating factor behind women entrepreneurs is the desire for control. Many successful female business owners are provoked by the opportunity to be their own boss and run their own company, a prospect that would never occur if they had worked for someone else. Their primary goal is not monetary reward but rather personal satisfaction and community involvement. Another inspiring component that many successful women entrepreneurs share is the fact that they have the ability to multitask and also the tendency to balance family life and career with their goal-oriented approach.
So, what is needed to boost the women entrepreneurship is to facilitate them with better access to finance and networks. There are financial schemes, mentioned below, launched by the governments at the central and state levels, which could go a long way in boosting women entrepreneurship.
Stand-Up India Scheme: Under this scheme, the woman entrepreneur is facilitated bank loans between Rs. 10 lakh and Rs. 1 Crore for setting up a greenfield enterprise in manufacturing, services or the trading sector. Green field signifies, in this context, the first time venture of the beneficiary in the manufacturing or services or trading sector.
In case of non-individual enterprises at least 51% of the shareholding and controlling stake should be held by either a woman entrepreneur.
The loan is given in the form of a Composite Loan i.e. to meet requirements of assets such as plant and machinery and working capital. It is expected to cover 75 % of project cost. A Rupay card is also issued to enable operation of the working capital component. Notably, the woman borrower has to contribute 25% as margin towards the project.
The loan cases under the scheme can be accessed either directly at a bank branch, through SIDBI’s Stand-Up India portal (www.standupmitra.in) or through the Lead District Manager ((LDM)
The beneficiaries could be walk-in customers for a bank, online applicants or trainees from various government and non-government agencies engaged in providing vocation training, Entrepreneurship Development Programs, Financial training etc.
SIDBI’s Stand-Up India portal (www.standupmitra.in): This portal facilitates by providing step by step guidance for connecting to various agencies with specific expertise viz. Skilling Centres, Mentorship support, Entrepreneurship Development Program Centres, District Industries Centre, together with addresses and contact number.
Broadly handholding support has been segregated in 7 areas of expertise viz. Skilling (Vocational), Financial Literacy training, Entrepreneurship Development Program, Mentoring, Project Report Preparation, Loan Application filling, Work sheds from DICs and Margin Money for Subsidy Support. The beneficiary would be liable to pay from his own sources for the training program to the agency directly as per their applicable fee structure.
As far as security is concerned, all the assets both fixed and current financed by the bank shall form the primary security by way of hypothecation/assignment/mortgage (registered as well as equitable).
Besides, collaterally the loans shall be secured either through Guarantee of Credit Guarantee Scheme for Stand-Up India Loans (CGFSIL) or by mortgage of property, registered or equitable, depending upon the title of the property with a minimum security cover of 125%.
The repayment period of the composite loan is fixed depending upon nature of activity and useful life of assets purchased with bank loan but not to exceed 7 years with a maximum moratorium period of 18 months.
Mudra Yojana Scheme: This general government scheme for small units is also applicable to women who want to start a small enterprise such as a beauty parlour, tuition center, tailoring unit, etc. It is also useful for a group of women who want to startup together. Loans from Rs 50,000 onwards and upto Rs 50 lakh are sanctioned under this scheme. Collateral and guarantors are required only if the loan amount exceeds Rs 10 lakh. There are three plans under this: Shishu plan (loans upto Rs 50,000 for new businesses), Kishor plan (loans between Rs 50,000 and Rs 5 lakh for well-established enterprises), and Tarun plan (loans between Rs 5 lakh and Rs 10 lakh for business expansion).
TREAD (Trade Related Entrepreneurship Assistance and Development) scheme: This scheme aims to empower women by providing credit to projects, conducting specific training and counselling, and eliciting information on related needs. The scheme provides for a government grant of upto 30 percent of the total project cost as appraised by lending institutions. These institutions would finance the other 70 percent.
Mahila Udyam Nidhi Scheme: Offered by Small Industries Development Bank of India (SIDBI), this scheme provides financial assistance of up to Rs 10 lakh to set up a new small-scale venture. It also assists with upgrading and modernisation of existing projects. The loans are to be repaid within 10 years, and this includes a five year moratorium period. Further, interest rates on these loans can vary according to market rates.
Annapurna Scheme: This scheme applies to women entrepreneurs who have started a food catering unit. They can avail a loan of up to Rs 50,000 to purchase kitchen equipment such as utensils and water filters. A guarantor is required to secure the loan. After securing the loan, it can be repaid in 36 installments. Further, interest rates under this scheme as per prevailing rates and assets will be taken as collateral by the concerned bank.
Stree Shakti Package For Women Entrepreneurs: It is offered to women who have majority ownership (over 50 percent) in a small business. The women also need to be enrolled in the Entrepreneurship Development Programmes (EDP) organised by their respective state agency. Under the scheme, an interest concession of 0.05 percent can be availed on loans above Rs 2 lakh.
Bhartiya Mahila Business Bank Loan: This scheme involves a loan of upto Rs 20 crore for women business owners of manufacturing enterprises. Under the Credit Guarantee Fund Trust for Micro and Small Enterprises, there is no need for collateral for loans up to Rs 1 crore. The loans under this bank loan scheme are to be repaid in seven years. The scheme was implemented by Bhartiya Mahila Bank which was merged with State Bank of India in 2017.
Dena Shakti Scheme: This scheme provides loans up to Rs 20 lakh for women entrepreneurs in agriculture, manufacturing, micro-credit, retail stores, or similar small enterprises. There is a concession of 0.25 percent on rate of interest. Under the scheme, loans up to Rs 50,000 are offered under the microcredit category.
Udyogini Scheme: Women entrepreneurs between the ages of 18 and 45, who are involved in agriculture, retail and similar small businesses, can avail loans up to Rs 1 lakh under this scheme. Further, her family’s annual income should be below Rs 45,000 in order to avail the loan. However, no income limit exists for widowed, destitute or disabled women. For widowed, destitute or disabled women from SC/ST categories, a subsidy of 30 percent of the loan, up to Rs 10,000, is provided.
Last but not the least, the banks and financial institutions have to understand that despite of all the problems faced by women entrepreneurs there are many promising predictions for them in the near future. The schemes in place for encouraging women entrepreneurship need to be extended in a proactive manner. Entrepreneurial activity creates growth, prosperity and solutions for social problems. And today’s trends show that women will be a driving force of entrepreneurial growth in the future.