How to Take Loan For Shop: So it becomes necessary to give information on the subject of loan for shop. Because running the shops requires constant funds. Our country India is a huge populous country, its population is more than one billion. Therefore, shopkeepers play an important role in providing everything to such a large population. In short, if we talk about shops, it includes grocery shops, medical stores, retail stores, electrical shops, hardware shops and many other unnamed businesses. Which helps to keep up with our busy life.
If you are also one of them, who are thinking of opening your own shop. So it is possible that you may need a loan for a shop. Not only those who want to open their new shop. Alternatively, shopkeepers who want to expand their shop may also require a shop loan.
Currently, business loans are available for all types of shop opening, purchase, shop expansion etc. All you need to do is find a lender or bank that can give you a loan with reasonable interest rates and other discounts in short time and formalities.
That means, you want to open a new shop, buy an established shop or expand your existing shop. So you can apply for shop loan. And you can also choose a repayment schedule on your own with affordable interest rates.
Why Loan is Needed for Shop
Every shop has different financial needs. Therefore, they cannot cater to sole shopper or small trader. And some people also resort to loans to open their new shops. Following are the main objectives of any person or shopkeeper for taking loan for shop.
- Opening or Buying a New Shop
When a person wants to open his own shop. Or he wants to buy an already established shop. But he cannot do it due to lack of money. So in such a situation he may need to take a loan for the shop.
- To Expand the Shop and Buy Land
Besides such shopkeepers who already have a shop and the shop is running well. Keeping this in mind, they want to expand their shop, for which they will need to purchase land. Or it may be that they own land, need money to stock a shop, etc., then they can also apply for a loan. Some banks offer business loans to retailers up to Rs. Provides loans up to 1 crore.
- To Increase the Stock in the Shop
Some shopkeepers whose shops are already doing well. And they want to make the process of running a store easier and stress-free. For which they wish that they have to order stock only once a month. In such a situation, it is natural that they have to order and stock the same amount of sales for the entire month. For which they will need more money, and they can apply for a shop loan for the same purpose.
- To Maintain the Operation of the Shop
It doesn’t matter what kind of shop you are currently doing. There is a lot of competition, and there may be times when you may not have the necessary funds to run your shop. Even in this situation, the shopkeeper may need a loan for the shop.
- Shop Redesigning and Maintenance
Everything has to be replaced with time, otherwise damage may occur. That is why there are many shopkeepers who want to redesign their shop with time. But for this they may lack money, so they may take a loan for the shop.
Benefits of Taking Loan for Shop
You will be able to easily meet the financial requirements related to your shop. And the biggest thing is that the shopkeeper takes loan for shop for any purpose. That purpose is served immediately, while the loan installments last for a long time. Due to which the shopkeeper’s shop and earnings both run. In addition
- Quick Loan Approval
These types of business related small loans are approved within a short period of time. If the loan amount is less than 2 lakhs, the loan disbursement process is paper less and the loan is approved quickly through eKYC.
- Instant Loan Disbursement
Because the purpose of such loans is to provide financial facility to small businessmen. This is the reason why loans are given instantly for shops. Here, once everything is validated and verified, the money is immediately credited to the borrower’s account.
- Having low interest rates
The objective of the Government of India and the State Governments is to promote employment by encouraging small entrepreneurs. For which they run many schemes with banks and other financial institutions. In which interest rates are very low, because they know that very high interest cannot be paid by small entrepreneurs.
- Flexibility in Repayment
If you want to take loan for shop and don’t take it then how can I repay the loan within the stipulated time. So want to inform you that payment terms are not bound by strict and fast legal procedures. These usually have flexible repayment options, which means you can convert your loan into easy installments as per your earnings.
Apart from this, the shopper can choose the loan tenure of 2 years, 5 years, 7 years, 10 years as per his convenience.
Where Can I Apply for Shop Loan
- Visiting Banks
All banks be it public sector banks or private sector banks offer business loans to retail traders. Similarly, other financial institutions also offer upfront funds to retailers. you
Can customize business loan as per my requirement. However, the amount of advance and cost amount to be given to which shopper is decided by the bank based on several factors.
Some special loans are only for entrepreneurs, whose monthly turnover is more than 5 lakhs. So some do not mention any such condition. An interested person can apply for a shop loan by visiting the preferred bank’s website or branch.
- Non-Banking Financial Companies (NBFCs)
Apart from banks, small entrepreneurs can also apply through non-banking financial companies (NBFCs) for shop loans. These companies also have good loan offers for various types of shops like grocery stores, medical stores, clothing stores etc.
Eligibility Criteria for Retail Business Loan
As we mentioned earlier, such small loans are easily processed and disbursed instantly. Hence, the eligibility criteria is not as strict as other loans. Following are the eligibility criteria for shop loan.
Candidate age should not be less than 21 years and not more than 50 years. In some cases the maximum age may be 55 years.
The candidate should have a valid document, which specifies that the borrower is a citizen of India.
If the loan is being taken for an existing shop, the turnover of that shop should be at least Rs. 150000 and minimum above mentioned turnover is required in the project report for the proposed shop also.
The business the entrepreneur is doing, or wants to do, does not defy any law, and should not be on the disallowed list as per government order.
In case of an existing shop, the shopkeeper has to show the financial record of his shop for the last one and a half years in which his shop is making profit.
Shop loan will not be available for any prohibited and illegal business activity.
Documents Required to Take Shop Loan
However, the documentation process for availing this type of loan is not very cumbersome and tedious. But despite this some of the basic KYC documents that have to be submitted while taking a shop loan are as follows.
The most recent bank statement of approximately six months.
Documents like driving license, voter ID, ration card, rent agreement etc. may be required as proof of residence.
Shop Ownership Certificate if the shop is already running.
PAN Card, Aadhaar Card, Voter ID Card as identity proof of the candidate.
Shop’s GST number, current account and PAN card may be required.
Expenses and Fees
Different banks and non-financial banking companies charge different fees and charges. But there are certain charges which are levied by almost every bank or NBFC across India as per the market rates. In this
One-time credit handling charges.
Outstanding EMI charges.
How to Take Loan for Shop
There is no doubt that any business idea needs money to get off the ground. Getting loans for shopkeepers and private enterprises has always been a major hurdle, due to the strict rules followed by banks. The best business loans in India are those that offer low interest rates and are easy to get.
If the loan amount is low, the loan is easily available even after completing less formalities. But as the volume of loans increases, the rules will also become stricter. So, if you want to take a loan for a shop, and you are doing so for the first time, keep the loan amount small. This allows banks or NBFCs to approve your loan faster.
First of all, understand your financial needs and analyze the amount that will be able to meet your needs. Only then you can fill that amount in the form while applying and also select a good lender.
If you want a shop loan, you should get your financial details like credit score and FICCO valuation checked by an accountant. Because before giving you loan, bank or financial companies will check these details of you.
If you wish, you can visit any financial appraisal and SBDC office available near you. From here you can verify your credit score and financial documents which will help you get a loan easily later.
Now if you have prepared all the documents, now you can apply for a shop loan by going to the website of the preferred bank or its branch. Currently almost all banks and NBFCs accept online applications. And the verification process is also very fast in this.
After the application form, the candidate needs to upload the documents for document verification.
After verifying the documents, the bank approves the loan for the shop, and then the first installment of the loan is transferred to the candidate’s account.