Running a shop and ensuring its everlasting sustenance is still a challenge to many Indians. These small groceries, medical, mobiles, garments, and retail shops are vital in a typical Indian life. Opening one such shop is a dream of many, but have you ever thought about the obstacles of starting such a shop? We know that the first thing that comes to your mind right now is the "money factor."
Yes, no shop can be established without investment, and that's the point where many people struggle. Buying a shop, setting it up, doing furniture work, storing all inventory, etc., is pretty money-draining, and there's no escape. If you have enough savings, then thumbs up, but what if you don't? Shall you leave your planning? Certainly not!
Banks offer a helping hand in such situations, but with few criteria. Also, before approaching any bank for a loan for the business shop, you should know all the ins and outs. In the following sections, you will learn all the requirements for acquiring a loan for purchasing a shop.
Did you know?
When you plan to get a loan for a shop opening, you need to consider several aspects. Such as making a detailed business plan, explaining how you will be using the loan you are getting for your shop in your business plan, summarising the objectives of your shop, and clearly expressing the approximate amount you need for each daily operational activity.
All You Should Know About Getting a Loan for Shop Purchase
Assessing the Costs of Opening a New Shop
The amount of money you will need as a loan depends upon how much money is needed to set up a proper shop. It depends on what sort and size of shop you plan to open. If you've already planned, you may have an idea of construction, stock indeed, workforce and so on., costs. Your family members or buddies can be helpful who have already established a similar kind of shop.Inquiry is the key here. Keep on inquiring with the professionals of each department, and keep noting down the potential investment.
It would resemble something like:
|
Task |
Estimated Amount |
|
Shop buying cost |
₹7,00,000 |
|
Stock of goods |
₹20,000 |
|
Furniture work |
₹50,000 |
|
Manpower for next six months minimum |
₹60,000 |
|
Business registration and documentation |
₹10,000 |
|
Additional unexpected costs |
₹10,000 |
|
Total |
₹8,50,000 |
This was a rough idea on how to calculate your costs. It may vary in your case. In this instance, the initial cost of the rough estimation is ₹8.5 lakh.Considering that figure and personal savings, it becomes easy to figure out how much loan is required for shop financing from the bank. However, remember that you'll get a loan as per the evaluation and estimation did by the bank officials. Your credit score may also help in sanctioning big loan amounts.
Benefits of Getting a Business Loan for Shop Purchase
There are abundant benefits of getting a loan for a shop opening. Most importantly, such loans are easy and quick to avail of today, but they are also highly customisable.You've got a big army of banks providing business loans for such instances, which means you have many options. Go with the most generous bank, impose fewer interest rates and have flexible terms and conditions. You can choose the most suitable tenure for you, considering your current income, potential income and EMIs.
Also Read: How to Apply for the Best Business Loan in India? - Types of Govt. Loan Schemes
Low-Interest Rates
Due to the fierce competition between the top banks, business loans are available at pretty low-interest rates today. You certainly stay away from tension when you already know that your EMIs won't over-burden you. Some banks even propose interest rates considering applicants' financial records and history. So, the bank already has an idea of how many shop loan interest rates you'd be able to pay comfortably.
Customizable Tenure
Yes, following the tenure dictated by the banks, isn't required in today's world. Today, you've got the flexibility to choose the most suitable tenure.
Loan Processing Takes No Time
The availing of business loans was very long and tiring a few years back. With the evolution of the internet, the procedures have changed. You may even get notifications of ads claiming to offer you a loan for a shop opening within 10 minutes. We won't explore the trustworthiness of such offers right now, but we'll talk about the reality. Today, the business loan application process is online, and it's very quick. You can get your loan approved within one day also.
Fast Disbursal
Earlier, you had to wait days for the loan amount to land in your bank account. Now that disturbing schedules and pannings for sure. Now, the process takes as low as three days, and you can carry on your further tasks straight after.
Flexible Repayment
If you're more comfortable paying your loan bi-monthly instead of monthly, you can do that! It's very helpful flexibility because if you're able to generate good profit in a short time after establishing your shop, you can repay your loan in less time.
Eligibility Criteria
Now, here comes another piece of good news. The list of criteria for getting approval for a business loan is very short. Check it once:
- You should be an Indian citizen.
- Your age should be 21 plus.
- Most banks demand a turnover amount in the months before you submit your loan application.
- The location of your business shouldn't be in any negative location lists.
- Your business should be 100% legitimate.
Documents Required
- You should have identity proof (ration card, PAN card, driving licence, etc.)
- Business PAN Card.
- Your address is proof of your legal documents.
- Proprietorship declaration of your business.
- Bank statement of last six months.
Also Read: Top 5 Government Loan Schemes for Small Business in India
How Long Is the Process?
As we mentioned earlier, the process isn't as tiring as it used to be. Today, it can be as short as three days. It's your time to know the process of availing of a loan for a shop purchase.
Step 1: Submitting an Application
If you've already researched the best bank to offer you a business loan, it's time to visit the bank and discuss your requirements with the branch manager. Once you're satisfied with the terms and benefits offered, apply and start the loan request and available process.
You can also choose to do the whole process online. It's as easy as filling in a few vital details about you and your business, uploading photos of your government IDs, and tapping the submit button. The representative will soon contact you for further inquiry, and they'll explain everything about repayment details, interest rates, tenure, etc.
Step 2: Upload Documents
The online application submission process for business loans may vary according to the platform. In some cases, you're asked to upload vital documents while applying only. On the other hand, sometimes you have to input the basic info in the online forms. You'll have to upload the documents only after the representative contacts you in such a case. These documents will undergo analysis. You'll soon get a notification or a call from the bank regarding the approval of your loan if everything goes right.
Step 3: Disbursal
After completion of the previous two processes, the third step, disbursal, won't take much time. You'll receive the loan amount right in your bank account with most banks within three days. You don't have to wait for any period to withdraw the amount now.
Conclusion
In older days, the chance of getting a loan approved for opening a shop was considered a matter of luck. Now, the situation is a hundred times easier. Government is supportive of small business people. Also, banks are much more generous than they ever used to be.
Calculating your expecting income and considering your financial conditions, you can avail of a loan for shop purchase in no time, following the right process. Don't forget the "repay" factor by getting too tangled up in your shop-related planning.
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