Vinnie Chaddha of Reboot Shoe Laundry advocates the Dena Shakti scheme. She says, “I was a participant at the Business Baazigar reality show on Zee TV that was aired three years back. My idea was one of the favorites of a judge, so he introduced me to Dena Bank.” The bank, which was convinced of the idea, granted her a loan under the scheme. She says, “The bank was quick to offer a me a loan of Rs 3 lakh. The entire loan procedure took just about a little more than a week’s time and around five to six visits.” On being quizzed whether “knowing somebody helped” to speed up things, she was quick to reply, “Funding depends on a number of things such as the loan amount, the concept etc. In my case, the loan amount was small, the concept was very fresh and I provided a guarantor for the loan amount.”
An added advantage is that some banks such as the State Bank of India (SBI) and Canara Bank have consulting cells for entrepreneurs. At Canara Bank, besides consulting, the cell also provides skill training, counseling and at times avenues for marketing their products as well. The counseling cells help provide a more realistic view of the business as they often give references of similar businesses and the issues they faced while starting up. During the last financial year, the bank disbursed Rs 489 crore for women under various schemes in the Delhi circle, a bank source revealed.
Some loans also provide relief in terms of collateral security. Take for example, Oriental Bank of Commerce’s (OBC) Oriental Mahila Vikas Yojana. Under the scheme, no collateral security is required up to Rs 10 lakh and in the case of small-scale industries (SSI) no collateral security is required for up to Rs 25 lakh. The bank’s website states, “Only hypothecation of assets created out of the bank’s finance will be taken as security.” When contacted, a senior bank official said, OBC is one of the banks that have reached its target of disbursing 5% of the previous year’s ANBC. Besides, the bank is also actively engaged in providing micro-credit by providing doorstep services to rural women.
Other nationalized banks with special schemes for women entrepreneurs are State Bank of India, Canara Bank and Punjab National Bank to name a few.
Challenges: A practical picture
Though a number of credit schemes are available for women, there are several bottlenecks as well. The first major problem is that while there is a lot of discussion on empowering women and promoting women entrepreneurs, these bank schemes only provide a minor relief in terms of interest rate and at times on collateral. The other terms and conditions of the schemes are similar to consumer loans. Moreover, in practice there is a major gap between policy and practice. Besides the project report, the sanction of the loan also depends on a case-to-case basis on the entrepreneur and the bank officer she approaches.
The higher the loan amount, the more difficult it is to get loans. Uma Reddy, Founder President of Engineering Manufacturing Entrepreneurs Resource Group (EMERG) puts forward her theory and says, “One of the problems is that it may be easy for a bank official to give a larger loan to a man compared to smaller loans to a woman because many smaller loans mean more paperwork. A woman mostly starts on a small scale. So at that level, she faces difficulty while accessing loans. It again happens at the growth level, where a woman wants to expand and is in need of a loan. At that stage, they give you only 10% more of their previous year’s turnover. This is obviously not enough.”
 |
| “The processes are too difficult. A lot of persistence is needed. As a country we are 102nd in setting up an enterprise and all these problems add to it.”
-- Uma Reddy |
Some tips
Research the various schemes available
Before approaching a bank, one should be aware of the various schemes that banks offer. This helps in being more practical and knowing which schemes you are eligible for. According to Uma Reddy, “You should be very well equipped with the various schemes. It prepares you to go to a official and demand to be funded under a scheme and benefit from it.”
Try to market your product first
One of the major difficulties a woman faces is marketing. Even banks are very skeptical about this while extending loans. Prof. Prabhu says, “Before starting up, I would ideally advice women to first test their product in the local market. They can invest some money from their pockets and get a small amount of their product manufactured by a local manufacturer. They can then try selling their product in the market. This helps in not only understanding the business better, but also when approaching the bank.”
Be thoroughly aware of your business plan
Creating a business plan is of utmost importance. However, Uma Reddy explains that, “Many a times what happens is that they sit with consultants to make the project report. In that case, it is very important to know the details of financial documents very well such as what is your debt equity ratio, when will be your break even etc.” Prof. Prabhu corroborates the point and says, “Sometimes, what happens is that they go too early to the bank and when the banks ask questions they get scared. Then, the banks might as well say, why should I give you loan when you even haven’t thought of this.”
Read loan documents carefully
You might have heard this statement many times, but ignored it. When going for a loan, it is extremely important to sit with the banker and understand all clauses and calculations. Anjana Vivek, founder of VentureBean Consulting, says, “You have to think through all scenarios before getting into a loan agreement. People often only look at the interest rate number, but there can be many hidden things.” She explains, “You might have taken a loan for, say, three years, but if your business does well and you want to pay the loan back, then there might be a pre-payment penalty that you may not have been aware of. Another thing is that often the interest rate is calculated at the end of the month, but if you have paid the loan on say the 5th of the month, then ideally the interest should be calculated for 25 days and not for 31 days.”
Join a women’s network
This helps in keeping in touch with other women entrepreneurs who are already in the field. This also aids in learning from the experience of other women. Another added advantage is that at times it helps in networking with bank officials. There are a number of such organizations such as AWAKE, EMERG and FIWE.
Subscribe to this comment's feed
written by Ralph Lauren, February 10, 2011
written by Smita, August 06, 2010
written by Alpanna Suratkar, May 21, 2010
I have already started 2 boutiques in Pune and Aurangabad recently on my own money..
I have a small manufacturing Unit in Pune..
any body can guide me to expand my business..?
written by payal shah, December 13, 2009
written by Navneeta Sahu, November 21, 2009
written by Preetha, November 20, 2009
written by Kanwal Kaur, November 07, 2009
www.cbfwconference.org
We are trying to give an opportunity to women led enterprises to showcase their businesses at the conference. The conference will attract investors, media and professional so it would be a good marketing opportunity for businesses. Details are also in the attached document
Criteria for enterprises:
1. Businesses can be income generating or a non-profit venture.
2. Businesses could belong to any sector and industry
3. Business has to be growth business with opportunities to grow
4. No micro-enterprises; it has to be a growth business which has created jobs or has the prospect of doing so in the near future.
Fees of stall:
We are generally waiving off the fee of the table/counter for small businesses but any enterprises which can afford to pay fees, we’ll charge the fee on a sliding scale.
Facilities: As we are not trying to make a profit from this programme, we will only be able to provide a small table(4*6’) covered with white table cloth. Stalls will be placed in the networking areas so that they get maximum exposure.
Please contact Kanwal Kaur at This e-mail address is being protected from spambots. You need JavaScript enabled to view it
written by Aarthi, November 05, 2009
| < Prev |
|---|
if there is den pls let me know.