How NBFCs Can Empower Women Entrepreneurs: Financing the Future

Pune, 27th March 2024: Women entrepreneurs are on the rise and they play a very important role in driving economic growth and evolution of MSMEs. But, female business owners do face unique challenges when it comes to getting capital and scaling their businesses, and usually these challenges are faced from traditional funding houses like public and private sector banks and lending institutions. Fortunately NBFCs have stepped into the market and have started filling this gap for good and have been proactively supporting female MSME owners to thrive the obstacles they were facing before when it comes to taking their business to the next stage.

Understanding the Needs of Women Entrepreneurs

Women-led businesses often operate in sectors traditionally viewed as high-risk by conventional lenders. They may lack a long credit history or collateral typically required by banks. Additionally, women entrepreneurs might juggle childcare and other responsibilities, requiring flexible loan structures and business support services beyond just financing. NBFCs are well-positioned to address these specific needs through a multifaceted approach.

Customized Financial Products

NBFCs can design financial products specifically catering to women entrepreneurs. These products consider the unique needs of women-owned businesses, offering:

• Smaller Loan Amounts: Many women-led businesses start with a lean approach. NBFCs are able to give smaller business loan for women which can be disbursed within 1 or 2 days ideally best suited for buying inventory, marketing etc.
• Flexible Repayment Options: NBFCs when compared to traditional banks offer a flexible set of repayment options which makes it easier for Women business owners to replay the availed amount.
• Collateral-Relaxed Loans: Recognizing that women entrepreneurs may not always have traditional collateral like property, NBFCs can consider alternative forms of security, such as personal guarantees or future receivables.

Facilitating Easier Access to Credit

NBFCs often have simpler and faster loan application processes compared to traditional banks. They may place a greater emphasis on business plans and potential rather than solely focusing on credit scores. Additionally, NBFCs can leverage technology to create online loan application platforms, making the process more accessible for women entrepreneurs across diverse locations.

Beyond Finance: Business Support Services

NBFCs can extend their support beyond simply providing loans. They can offer valuable business support services, including:

• Mentorship programs: Networking helps them interact with similar entrepreneurs and mentorship opportunities from industry experts who are women help budding entrepreneurs to understand better and motivate them to face common hurdles from the experience shared by the mentors. This helps create a reliable community for feedback and new learnings.
• Entrepreneurship workshops: Providing workshops and webinars/presentations on topics like financial literacy, trending and proven marketing strategies, and possible legal aspects of running a business helps the novice entrepreneur to be aware of what to face and how to handle problems as they go from point A to point B in their journey.
• Networking opportunities: It’s crucial for any business to have a strong and supporting community to keep themselves motivated and feel supported when testing tough waters. NBFCs periodically organize events that connect women entrepreneurs with potential investors, vendors and other MSME owners from various industries.

Building a Supportive Ecosystem

NBFCs also partner up with various government initiatives, Non Government Organizations, and various women entrepreneur-focused organizations. These collaborations can create an ecosystem which provides not only financial aid but also business knowledge, mentorship, and access to new markets to expand.

Benefits for Everyone

By supporting women entrepreneurs via MSME business loan, Non Banking Finance Companies contribute drastically to the overall economy of the country. Various studies have shown that businesses owned by women tend to reinvest a higher percentage of their profits back into their communities, which is beneficial for growth of any local economy’s development. Apart from this, a more diverse and inclusive entrepreneurial ecosystem leads to a wider range of ideas and creativity within businesses, ultimately benefiting the entire economy.

Conclusion

NBFCs have shown their potential and have already become powerful allies to women owned businesses in India. Times are changing and stereotypes are vanishing as Indian NBFCs are now offering customized financial products, facilitates access to credit, and provides business support in various ways to the growing community of women business owners and are reducing the gap faced by women in the business world. This collaborative approach is unlocking the immense potential of women entrepreneurs, is creating lots of jobs in the market, drives sustainable economic growth, and is creating a more equal and thriving business landscape.