An increasing number of homemakers are now opting to start small businesses from their homes to fulfill their entrepreneurial dreams. However, most women despair for lack of funding to start or expand their business. Personal loans hold the answer to this problem. However, the prerequisite for availing of a personal loan is that the applicant should have a steady source of income. But homemakers usually have little or no income.
The good news is that the banking sector is now coming up with innovative terms for personal loans for women. And homemakers across India can now avail of funding from banks for starting small businesses. If you are a homemaker looking for loan options to start a business, here is some essential information for you to consider –
How Can Housewives Get a Personal Loan to Start a Business?
- Add a Worthy Co-Applicant – As a homemaker, you may not have a steady income, but a family member such as your spouse, sibling, parent, or child might. If they are the co-applicant in your loan request, there is a greater likelihood of getting loan approval.
- Add a Guarantor – If you don’t have the option of a co-applicant, you can include a guarantor in your loan application. The guarantor should be someone with a steady source of income.
- Government Schemes – The government also has some good schemes for women entrepreneurs to avail loans at affordable interest rates. Some good examples are the Pradhan Mantri Mudra Yojana for women or the Udyogini Scheme.
- Avail Secured Loans – Personal loans are unsecured and therefore unavailable to those who don’t have a steady income. However, homemakers may avail of secured loans like loans against property or other security. However, you will need to add a co-borrower with a steady income for a secured loan.
- Gold Loan – Gold loans mean that you need to keep your gold jewelry as collateral to avail of a loan. Usually, gold loans prove less expensive than other unsecured loan forms.
Features of Personal Loans for Homemakers
- Multiple Usage – Homemakers who avail of a personal loan may use the loan amount in any way they need for their business. They are also free to use the funding at any stage of business. There are no limitations attached to the usage of the borrowed money.
- Convenience – Personal loans for homemakers are given only upon adding a co-applicant who has a steady source of income. But once added, getting personal loan approval is simple and convenient.
- Flexibility – Personal loans give borrowers the freedom to choose a loan repayment tenure of their own choice. The flexibility offered by personal loans can be beneficial to homemakers trying to start their businesses.
- Fast Loan Approval – Personal loans usually have a fast-tracked process that can be completed online. There is no need to visit the lender in person, and the paperwork needed is minimal.
Eligibility Requirements for Personal Loan
The loan applicant must fulfill some essential eligibility criteria to get approval for a personal loan. You may check your eligibility by logging on to your bank’s website and using the personal loan calculator to know the likelihood of getting loan approval for yourself. Here are some of the essential eligibility criteria you need to fulfill –
- Be a citizen of India
- Age between 21 to 65 years at the time of loan application
- Have a steady source of income
- Have a minimum CIBIL Score of 750
Documents Required for a Personal Loan
You can apply for a personal loan online, and the required paperwork is minimal. However, there are some documents you will need to submit. Here is a list of the documents you need for KYC –
- Proof of identity – PAN card, voter’s ID, Passport, driving license
- Proof of address – Aadhaar card, Utility bills, Passport, rental agreement
- Salaried individuals need to provide salary slips of 3 months
- Bank account statements of past six months
- Self-employed individuals need to give information on tax returns for the past three years
- Income statements
Customer service representatives verify the information you provide to the bank. They discuss your loan requirement and give the terms. Next, your application form and documents are processed and confirmed by the bank.
Loan Sanction & Disbursement
Once the loan is approved, the bank usually disburses the funds to your bank account within a few hours. Your loan approval notification is sent to you by email. It also includes your loan agreement and disbursement schedule. It is advisable to keep your loan schedule document safe for future reference.
Now that you know about all the loan options available to you – it should not be challenging to select a method that suits your requirements. Applying for a personal loan as a homemaker is easier than it seems. All you need is a co-applicant with a steady income and a strong will to make your business successful.
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at firstname.lastname@example.org.