Let’s continue our focus on womenentrepreneurs this week. Women entrepreneurs are missing from the startupstory. The central government’s ambitious Startup India, Stand-up Indiainitiative has failed to attract women entrepreneurs. Only 43% of the 27,084recognised startups in India had a woman director as of 8 January, according tothe Economic Survey 2019-20.
When we peep into the factors responsiblefor keeping women away from entrepreneurship, it comes to the fore that womenhave no risk covering possibility financially, besides they lack creditsupport. There is lack of institutional support system for first timers so evenat smallest obstacle they give up.
Women are missing in the Startup Indiainitiative because many women, who start their initiatives, are not in thelimelight or mentored professionally. Additionally, when it comes to funding,women are not only scrutinized about how they’d manage their businesses, butalso their families in parallel, which isn’t a filter men are put through. Thuswomen need to break through to filters to raise capital and grow theirbusinesses.
A recent research paper released byObserver Research Foundation (ORF), a public policy think tank, argued that thelow women entrepreneurship rates are part of a broader gender gap in economicparticipation and opportunity.
The paper titled, “Women Entrepreneurs inIndia: What is holding them back?”, observed that policies aimed atincluding more women in senior and leadership positions are needed, which willhelp them gain experience and knowledge, which in turn will enable them tostart their own businesses.
Women in rural areas, especially, are apotential gold mine when it comes to entrepreneurship and must be encouragedthrough skilling and handholding.
Let’s understand, much of a businesswoman’s drive to pursue entrepreneurship is due to the immense passion she hasfor her work. Another motivating factor behind women entrepreneurs is thedesire for control. Many successful female business owners are provoked by theopportunity to be their own boss and run their own company, a prospect thatwould never occur if they had worked for someone else. Their primary goal isnot monetary reward but rather personal satisfaction and community involvement.Another inspiring component that many successful women entrepreneurs share isthe fact that they have the ability to multitask and also the tendency to balancefamily life and career with their goal-oriented approach.
So, what is needed to boost the womenentrepreneurship is to facilitate them with better access to finance andnetworks. There are financial schemes, mentioned below, launched by thegovernments at the central and state levels, which could go a long way inboosting women entrepreneurship.
Stand-Up India Scheme: Under this scheme,the woman entrepreneur is facilitated bank loans between Rs. 10 lakh and Rs. 1Crore for setting up a greenfield enterprise in manufacturing, services or thetrading sector. Green field signifies, in this context, the first time ventureof the beneficiary in the manufacturing or services or trading sector.
In case of non-individual enterprises atleast 51% of the shareholding and controlling stake should be held by either awoman entrepreneur.
The loan is given in the form of aComposite Loan i.e. to meet requirements of assets such as plant and machineryand working capital. It is expected to cover 75 % of project cost. A Rupay cardis 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 beaccessed either directly at a bank branch, through SIDBI’s Stand-Up Indiaportal (www.standupmitra.in) or through the Lead District Manager ((LDM)
The beneficiaries could be walk-incustomers for a bank, online applicants or trainees from various government andnon-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 stepguidance for connecting to various agencies with specific expertise viz. SkillingCentres, Mentorship support, Entrepreneurship Development Program Centres,District Industries Centre, together with addresses and contact number.
Broadly handholding support has beensegregated in 7 areas of expertise viz. Skilling (Vocational), FinancialLiteracy training, Entrepreneurship Development Program, Mentoring, ProjectReport Preparation, Loan Application filling, Work sheds from DICs and MarginMoney for Subsidy Support. The beneficiary would be liable to pay from his ownsources for the training program to the agency directly as per their applicablefee structure.
As far as security is concerned, all theassets both fixed and current financed by the bank shall form the primarysecurity by way of hypothecation/assignment/mortgage (registered as well asequitable).
Besides, collaterally the loans shall besecured either through Guarantee of Credit Guarantee Scheme for Stand-Up India Loans (CGFSIL) orby mortgage of property, registered or equitable, depending upon the title ofthe property with a minimum security cover of 125%.
The repayment period of the composite loanis fixed depending upon nature of activity and useful life of assets purchasedwith bank loan but not to exceed 7 years with a maximum moratorium period of 18months.
Mudra Yojana Scheme: This generalgovernment scheme for small units is also applicable to women who want to starta 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. Loansfrom 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 10lakh. There are three plans under this: Shishu plan (loans upto Rs 50,000 fornew businesses), Kishor plan (loans between Rs 50,000 and Rs 5 lakh forwell-established enterprises), and Tarun plan (loans between Rs 5 lakh and Rs10 lakh for business expansion).
TREAD (Trade Related EntrepreneurshipAssistance and Development) scheme: This scheme aims to empower women byproviding credit to projects, conducting specific training and counselling, andeliciting information on related needs. The scheme provides for a governmentgrant of upto 30 percent of the total project cost as appraised by lendinginstitutions. These institutions would finance the other 70 percent.
Mahila Udyam Nidhi Scheme: Offered by SmallIndustries Development Bank of India (SIDBI), this scheme provides financialassistance of up to Rs 10 lakh to set up a new small-scale venture. It alsoassists with upgrading and modernisation of existing projects. The loans are tobe 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 towomen entrepreneurs who have started a food catering unit. They can avail aloan of up to Rs 50,000 to purchase kitchen equipment such as utensils andwater filters. A guarantor is required to secure the loan. After securing theloan, it can be repaid in 36 installments. Further, interest rates under thisscheme as per prevailing rates and assets will be taken as collateral by theconcerned bank.
Stree Shakti Package For WomenEntrepreneurs: It is offered to women who have majority ownership (over 50percent) in a small business. The women also need to be enrolled in theEntrepreneurship Development Programmes (EDP) organised by their respectivestate agency. Under the scheme, an interest concession of 0.05 percent can beavailed on loans above Rs 2 lakh.
Bhartiya Mahila Business Bank Loan: Thisscheme involves a loan of upto Rs 20 crore for women business owners ofmanufacturing enterprises. Under the Credit Guarantee Fund Trust for Micro andSmall 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. Thescheme was implemented by Bhartiya Mahila Bank which was merged with State Bankof India in 2017.
Dena Shakti Scheme: This scheme providesloans up to Rs 20 lakh for women entrepreneurs in agriculture, manufacturing,micro-credit, retail stores, or similar small enterprises. There is a concessionof 0.25 percent on rate of interest. Under the scheme, loans up to Rs 50,000are offered under the microcredit category.
Udyogini Scheme: Women entrepreneursbetween the ages of 18 and 45, who are involved in agriculture, retail andsimilar 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 availthe loan. However, no income limit exists for widowed, destitute or disabledwomen. For widowed, destitute or disabled women from SC/ST categories, asubsidy of 30 percent of the loan, up to Rs 10,000, is provided.
Last but not the least, the banks andfinancial institutions have to understand that despite of all the problemsfaced by women entrepreneurs there are many promising predictions for them inthe near future. The schemes in place for encouraging women entrepreneurshipneed to be extended in a proactive manner. Entrepreneurial activity createsgrowth, prosperity and solutions for social problems. And today’s trends showthat women will be a driving force of entrepreneurial growth in the future.