For small and medium business owners in India who want to enter the retail market, shop loans have become their lifeline. Shop loans help them set up their business easily and allow them to kickstart their venture.
In India, shop loans are for the owners of retail outlets, grocery stores, or any other small business. It offers you flexible solutions for your financial needs. However, it’s challenging to find the right shop loan amongst various lenders with varying interest rates and eligibility criteria.
Why Should You Take a Shop Loan?
Taking a shop loan can be beneficial for you under various circumstances:
- If you want to grow your small business.
- If you want to keep your inventory well-stocked.
- If you want to do some advertising for growth and reach.
- If you want to do the seasonal changes without any financial hindrance.
- If you want to manage your fixed expenses like rent or staff salaries.
Why choose Shop Loan?
Some people may confuse between a business loan and a shop loan, but a shop loan has its own set of advantages.
- Quick Funds: Get funds disbursed quickly for your business requirements
- Flexible Repayment Tenure: You can select your repayment tenure based on your financial capacity and planning.
- No Collateral Needed: Many shop loans come under unsecured loans, so you can secure them without any mortgage.
Interest Rate For Shop Loans in India
Interest rate is the deciding factor before applying for any loan. In India, it may vary according to the applicant’s credit report, repayment tenure, loan amount, and lender’s policy.
- Public Sector Banks: Interest rates range between 8.40% and 12% p.a.
- Private Banks: Interest rates range between 9.75% and 14% p.a.
- NBFCs (Non-Banking Financial Companies): Interest rates range between 12% and 20% p.a.
It’s very crucial to compare shop loan interest rates, processing fees, and other charges before finalizing your lender.
Top Loan Shop Loan Providers in India
| Financial Institutions | Interest Rate |
| State Bank of India (SBI) | 8% onwards* |
| ICICI Bank | 9% onwards* |
| Axis Bank | 11% onwards* |
*Note the interest rate may be subject to change
Shop Loan Eligibility Criteria in India
While many lenders have different criteria, here are some general criteria which can assist you in securing the best shop loan.
- Age: The applicant must be between 21 to 65 years old.
- Business Stability: The business must be operational for at least 2 years.
- Credit Score: A minimum 700 credit score is preferred.
- Annual Turnover: A minimum of ₹10 lakh annual turnover is required.
- Income Proof: Bank statements, and ITRs (Income Tax Returns) of the last 2 years.
- KYC Documents: Aadhaar Card, PAN Card, Address Proof, and other business registration documents.
How to Apply for a Shop Loan in India?
It is a simple and straightforward process if you want to apply for a shop loan in India. Here are a few steps:
- Research: First of all explore various lenders or financial institutions who provide shop loan terms, eligibility, and interest rates.
- Check your eligibility criteria: Cross-check if you meet the lender’s requirements, ticking off all the items on the list improves your chances for a fast loan disbursal.
- Documentation: Arrange all the necessary documents like ID proof, business proof, KYC documents, credit report, etc.
- Apply: Visit the lender’s website if you want to apply from the convenience of your home or go to their nearby branch if you want to apply offline.
How to get the Best Shop Loan?
Here are a few useful tricks to secure the best shop loan in India:
- Improvise Your Credit Score: A higher credit score helps you to get comparatively lower interest rates. A score above 700 is preferred to be an ideal score.
- Track Your Financial Records: Make sure all your business transactions are transparent and documented. Most of the lenders ask for last 2 years bank statements.
- Research and Compare: Don’t go ahead with the first loan offer you get, always compare the lender’s interest rate, eligibility, and other terms to find the best deal.
- Choose the Right Loan Amount: Only borrow the amount you need to dodge your financial hurdles.
- Try Negotiating: Some lenders are willing to reduce processing fees for eligible applicants.
Securing the best shop loan in India can be simple if you do your own research, invest time in comparing, and thoroughly understand the offerings of top lenders. A shop loan with attractive interest rates, flexible repayment terms, and easy eligibility criteria, can be referred to as the best financial tool for small business owners who are looking for growth and business expansion.
It totally depends on you if you choose a public sector bank like SBI or opt for an NBFC like Bajaj Finserv, but make sure you compare all options before finalizing your lender or financial institution.
The right loan not only gives you the financial power to enhance your business but also creates a strong financial framework for future needs and requirements.
If you found this blog interesting & informative, you can also read about: Women’s Business Loans: Tips and Tricks for Successful Applications
