Check Out, How Can A Shop Loan Be Effectively Used?

Shopkeeper shop loanvia

Setting up a business has become much easier than before due to a large number of financing options available. If it has always been your dream to set up a shop or a store of your own, and you find satisfaction in setting up a shop of your choice, you can go ahead and apply for a loan for a shop as a commercial venture. A shop loan in India has become a popular choice of debt finance for all those who dream of setting up their shops.

A shop loan in India is available through several reputed banks and financial institutions. It can be availed by any individual, whether a salaried employee or a self-employed person, as long as they meet the eligibility criteria of the lender. It is always recommended to do proper research before applying for a shop loan in India. Your motives for securing the loan should be clear and pre-defined so that you can proceed directly toward the establishment or expansion of your business once you get the loan for the shop.

Shopkeeper shop loan

The table given below gives a quick overview of the uses and the benefits of securing a shop loan in India. These loans are given at higher interest rates than personal loans, but their return on investment is much greater. These shop loans come as customized packages from the lending bank or NBFC. They are easy to avail, quick and hassle-free with minimal paperwork involved.

 Shop Loan in India
 Uses Advantages
 Construction/ Expansion/ Improvement of Shop or   Store High-value loan
 Marketing Collateral free
 Shop Inventory Quick dispersal
 Working Capital Flexible tenure

Let us now take up in detail the various uses to which you can put your shop loan for maximum results for your business.


Uses Of A Shop Loan In India

1. Construction/Expansion/Improvement of a Shop or Store-

You can go ahead and secure a shop loan in India to set up your dream shop.

  • You can avail the loan to either buy a new shop premise or a commercial space that fits into your budget. As a shop owner, you will always look for expansion of your business. This can be your first shop or even a new branch in a different location.
  • You can also plan to start up a new product line.
  • If you already have an existing shop and you are planning to reconstruct the building or expand the premises, then also you can avail of a loan for your shop. You can use the funds for renovation or rebuilding
  • You can also invest the funds in the purchase of new material for the shop and your business.

2. Marketing and Advertisement

Once your shop is set, and you are all set to sell its products, the business cycle starts. To make your product popular, you will have to go about and spread the word about your shop in the masses. This will help in gathering a customer base for your shop, and at the same time, it will boost sales. At this point, Marketing sets in. Marketing techniques will be required to expand your customer base, identify new potential clients, and inform them about your product or service.

 You can formulate an effective marketing strategy based upon the products you sell, your target customer base, and the offers, and the pricing that you intend to use.

  • You can utilize your loan funds to employ more working personnel or a manager who can come up with good schemes to promote your business.
  • You can even plan on starting new marketing campaigns
  • You can start advertising for your shop and its products on all popular channels like-the television, internet, newspaper, radio or the simplest of them all-advertisement pamphlets.

You can invest your money judiciously into this area to get maximum returns.

Shopkeeper shop loan

3. Shop Inventory

Inventory is the lifeline of your shop. A proper and well-maintained list of items or Inventory will always keep you up-to-date with your custom orders. A good shopkeeper will always make sure that his shop or store stays well-stocked to prevent the hassles of running around arranging for deficit goods.

  • You can use the funds from the shop loan to purchase a new inventory for your store.
  • If your business has been doing well for quite some time now, and you have plans for its expansion, you can also think about introducing new products or launching a new product line in your shop or store.
  • Sometimes, you may need an excess inventory, due to seasonal business cycles. For example, an electrical appliance retail store may need excess appliances like TVs, refrigerators, ACs, during festival seasons when sales will be at the peak. There is no need to stay hand-ties with your funds during these times. You can prudently use the loan funds for procuring more inventories ahead of the sale season.

 4. Funding Working Capital

Working capital constitutes your day to day expenses in your business. Even after setting up your business and investing your funds in its establishment and expansion, you always need a steady supply of funds to finance your business’s operational needs. You will require money to pay the rent or your bills, payroll, inventory, and other business expenses. Even after proper investment in fixed assets, your business needs to have a sufficient supply of working capital to cover your financial obligations and at the same time have a surplus to boost your profits.

You can utilize the funds availed from the loan for a shop that you have taken for efficient working capital management.

The discussion above lays down how a shop loan in India taken by a business owner can be used. Whether it is for reconstruction, renovation or purchasing new inventory, a shop loan can be judiciously put too many uses. You should ensure timely payment of loan installments to prevent the accumulation of debt. A loan that is well-managed, will go a long way in ensuring your financial well-being.

Several schemes are being run to enhance women’s power. Women can establish themselves through these schemes. So you can start your business. If you are already doing business in the past, you can make money. Here we are giving information about such schemes that can be useful to you.

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Anushka Jain
the authorAnushka Jain