India has a vast consumer base. Everyday people need easy access to groceries, garments, electricians, plumbers, and many other services. These needs are mostly fulfilled by shopkeepers. If you are also planning to set up a shop then a business loan would be a great option. You can either avail of small business loans for MSME loans. Shop loans can help you in buying stocks for your shop and commercial spaces for expansion. Shop owners must consider which type of loan they want to avail themselves of.
In this article, we will explain to you the things to ponder about before investing in a business loan.
How Much Funding Do You Need?
It is very crucial to determine the need for the loan amount to be taken. You should not take a business loan without thinking of the consequences. Any failure to repay the loan can pose threat to your business or shop. You should ask for enough money to accomplish your goal.
If you are planning to renovate your shop, you must calculate the renovation cost and apply for a business loan accordingly. If you need a business loan to buy tools or machinery, there are several specific loans you can avail of.
How Much The Small Business Loan Will Cost?
If you are planning to apply for a shop loan, you should calculate what it will cost you every month. You should research about the different small business loans being offered by the Banks and other financial institutions. Calculate the EMIs that you will have to pay every month. You must know what the interest rates are and how many years you will be able to pay it.
What Is Your Credit Score?
The credit score is the primary factor that helps you in getting a business loan. Before applying for a shop loan analyse your credit score. A high credit score of above 700 will increase your chances of getting a low-interest shop loan. If your credit score is lower than 600 then your loan application may be rejected.
What Is The Credibility Of The Lender?
Banks have very stringent terms and conditions on small business loans. Thus, most shop owners with inappropriate documentation can get rejected. In this case, fintech companies can provide quick loans without much documentation. You must check the credibility of these lenders from other user experiences by Google play store ratings. You must check if the lenders have a transparent policy and provide digital services.
What Is Your Financial Situation?
You must analyse your financial situation before applying for a shop loan. Looking at monthly and yearly budgets may help you understand your expenses and profit. If you have a profitable business then your chances of getting a small business loan may improve. You must have some liquid assets so that you can repay your loans in the worst scenarios.
How Much Collateral You Can Offer?
You will be eligible for a shop loan instantly if you have sufficient collateral. If you are planning to expand your shop or buy more commercial space then you need a larger loan amount. Banks feel more comfortable lending business loans if you have assets that can repay your loan in the worst scenarios. Collaterals may include your shop, stocks, bonds, and machinery.
- Can I get a Shop loan to buy a shop?
If you have a good credit score, mostly above 700, and good credit history, you can get a business loan.
- How to apply for a shop loan?
Visit the lender’s website and fill the application form for a business loan. Upload the required documents to the portal. Your application and documents will be checked and if the loan amount gets approved, you may get the loan amount in your accounts in 3 days.
- How do I get a loan for my Kirana shop?
If you are looking for an instant business loan for your grocery store then look for the MSME loan schemes. PMRY loan scheme has low-interest rates and flexible tenures. MSME loans will be very beneficial for your Kirana store and won’t put a burden on you.
- Can the loan be closed before the tenure?
Yes, the business loan can be closed before the tenure. Most of the lenders generally ask for a charge for pre-closure of the business loan. This charge can be put in after EMI is paid.
- What information do you need for a business loan?
You need to have a loan application form, business plan, business credit report, Income tax returns, financial statements, collateral, and bank account statements for availing of a business loan.
- Who can avail a business loan in India?
Entities, self-employed non-professionals, and self-employed professionals can apply for a Business Loan, after fulfilling the required eligibility criteria.