Business Loan for Retail Store

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Retail store owners require access to substantial capital in order to ensure smooth functioning of their store. Hence, to meet their financial requirement, retailers often resort to availing a business loan. The credit availed through a business loan can be utilized to renovate the store, hire new employees, stock up inventory, purchase advanced equipment, consolidate debts, and meet working capital needs.

With the growing financial sector, availing a business loan has become a hassle-free process. Banks and other Non-Banking Financial Company (NBFC) provide a variety of business loan products with lucrative features. Some of these loan products help entrepreneurs to establish a new retail business or acquire an existing retail store. Business loans are also helpful for entrepreneurs who are looking forward to expanding their retail business.

However, in order to avail a credit product with favourable terms and conditions, entrepreneurs must always compare various loan offers provided by different financial institutions.

Below are some of the business loan products for retail store owners.

1. Term Loans

  • Term loans are repaid through fixed EMIs. Hence, the retail store owners can plan the monthly expenses of their store accordingly. Knowing the EMI beforehand can also be helpful in maintaining positive cash flow. However, availing a term loan with favourable terms and conditions from a commercial bank can be difficult for the retailers. Therefore, they normally opt for term loans provided by NBFCs to avail timely credit.
  • The eligibility criteria of term loans may vary from one financial institution to another. Online application, quick approval, and instant disbursal are some of the other advantages of availing a term loan from a leading financial institution.

2. Equipment Financing Loan

  • In order to improve customer experience and boost their sales, retailers often consider expanding or redesigning their storefronts.
  • They also invest in new equipment to keep their store competitive and relevant in the long run.
  • Renovating the store and purchasing upgraded equipment requires a large amount of funds. Equipment financing is a type of secured business loan that can be availed by retailers to finance equipment purchase and redesign their store.

3. Inventory Loans

  • Often retail store owners purchase inventory in bulk to avail additional trade discount. Purchasing inventory in bulk requires a lot of money and hence, retail store owners avail financing through inventory loans.
  • Many financial institutions provide inventory loans at competitive interest rates. Inventory loans are secured loans wherein the purchased inventory acts as the collateral.

4. MUDRA Loans

  • Under the Pradhan Mantri MUDRA Yojana (PMMY), retail store owners can avail credit up to Rs 10 lakhs.
  • The Government of India has launched several schemes to promote small businesses. Retailers are eligible to avail credit up to Rs 50 thousand under the Shishu scheme, Rs 5 lakhs under the Kishore scheme, and Rs 10 lakhs under the Tarun scheme.
  • Retailers can apply for MUDRA loans through nationalized banks, commercial banks, cooperative banks, NBFCs, or the official portal.

Relaters can opt for any of the above-mentioned loan products to expand their store. Lastly, it is always advisable to read the terms and conditions & sme loan meaning of the loan agreement carefully before availing it.