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April 11, 2022

MSMEs Applying Business Loan for Women Boost Financial Inclusion in the Indian Economy

    • April 11, 2022
    • By Team Kinara
    • < 1 mins read

    Business Loans

    Women have traditionally been assigned to domestic work, which severely limits their ability to step out of the home and pursue other aspirations. While sections of Indian society still foster these beliefs, there has also been a vast overhaul in the way that women and their capabilities are perceived. Over the years, millions of women have joined the workforce in various capacities and demonstrated that they can perform just as well as their male counterparts, if not better. This shift in perception also means that more women are now able to take up jobs and start businesses, earning them valuable expertise and financial independence. One additional factor that can help women entrepreneurs is access to capital. Let’s explore how applying for business loans for women can drive growth and financial inclusion for women.

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    Why women entrepreneurs in India lag behind

    Even as women excel across various avenues in the country, the number of women entrepreneurs in India has not kept pace with this evolution. This is especially true when it comes to MSME business for women. Out of the 63 million small businesses in India, less than 20% are run by women. Even among the MSME women entrepreneurs in the country, most of them own micro-enterprises.

    Part of the reason for this huge disparity between the number of male and female business owners in the country is the general mindset and societal bias that exists. Women are considered by many to be incapable of starting and running a business successfully. This results in many of them being discouraged from taking the entrepreneurial plunge. Those that do might face significantly more resistance and hurdles than a man would. One major issue that plagues MSME women entrepreneurs is the lack of capital. Since many Indian women don’t own property, they have nothing to leverage in order to raise the investment amount to start or grow a business.

    MSME business for women can drive the economy

    Women’s participation in the workforce in India is abysmally low across the board, and entrepreneurship is no exception. The World Economic Forum's 2020 Global Gender Gap Index figures indicated that a meager 25% of women were formally engaged in India's labour market, compared with 82% of men.

    This is a direct result of the fact that Indian women are often, directly and indirectly, discouraged from joining the workforce. MSME women entrepreneurs are up against a number of systemic setbacks when trying to launch or expand a business. These can range from the resistance they face when trying to step out of the home to work, all the way to lenders shying away from giving them the capital they need. The irony is that if women were to participate in the workforce equality, the Indian economy would benefit enormously. In fact, according to an estimate by the International Monetary Fund, equal participation of women in the workforce will increase India’s GDP by as much as 27%.

    Applying for business loans for women can be the answer

    Business loans are a great solution for small business entrepreneurs to access the capital they need in short order. Unfortunately, in this regard too, MSME women entrepreneurs face a disproportionate amount of difficulty. According to studies, close to 20% of women entrepreneurs face rejection when seeking loans from banks and lending companies, more than double the number of men, which stands at 8%. This presents an additional hurdle for women, who already struggle to have the wherewithal to enter a male-dominated area like business. The way to cut through these issues would be to make business loans easily accessible to women entrepreneurs. Non-banking Financial Companies like Kinara Capital have filled this gap in the market by coming up with specific solutions for women. Kinara’s collateral-free loans take away the main debacle for women, since they often don’t have ownership of assets that can be leveraged as collateral.

    Advantages of small business loans for women entrepreneurs

    Since capital access can drive business growth and success, there is a clear advantage for women MSME entrepreneurs to take advantage of the benefits they offer. Kinara Capital’s collateral-free business loans are a great resource to begin with, but the company also offers a special advantage for women business owners. Under Kinara’s HerVikas loan scheme, women-owned businesses can get an upfront discount on all loans. The scheme is aimed at encouraging women entrepreneurs to take their businesses to the next level, against all odds. Kinara also offers the additional advantage of doorstep service and minimal paperwork for loan issuance. These factors add up to making the loan application process extremely smooth for women, who might have trouble handling extensive paperwork or going in person to put in loan applications.

    Women MSME entrepreneurs, when they are armed with the right tools, can work wonders at both the social and economic levels. Bringing women into the fold of formal lending drives financial inclusion and empowerment, and they can further create jobs for other women in the community. Women becoming financially self-reliant creates multi-generational change at the family and community levels. Applying for business loans for women can be the first step towards this transformation.

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    Written by
    Team Kinara
    • Tags
    • MSME Loan
    • Business Financing
    • Working Capital
    • Fintech Loan
    • Business Loan
    • Her Vikas
    • Financial Inclusivity
    • Women Entrepreneur

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