What is Shop Loan?
In our country, despite the mass acceptance of digitization and online shopping, a large section of consumers still believe in going to the shops to buy groceries, clothes and other consumer durable products. Therefore, it’s no wonder that this sector continues to boom. With a lot of potential in this area, entrepreneurs are looking for suitable business opportunities in small businesses. Hence the market demand for Business Loans / Shop Loans is gaining popularity. So, if you are thinking of opening a new shop or planning to renovate and refurbish the existing premise to grow your business, it would be prudent to understand the criteria for seeking a Business Loan / Shop Loan before applying for one.
How is Shop Loan or a Business Loan different from a Home Loan?
Before discussing the Criteria for a Business Loan / Shop Loan, let us understand the difference between a Business Loan / Shop Loan and a Home Loan. It is a known fact that consumers are knowledgeable in the Home Loan market, and there is a lot of awareness on it. Getting a housing loan is more comfortable, as the loan the approval and sanctions happen against collateral security provided by the borrower. But getting a Shop Loan or Business Loan can be complicated, as it involves many procedures, and there is not much awareness on this subject.
Under a Business Loan / Shop Loan, there are bouquets of products available to suit your needs. Banks and large financial institutions grant business loans to small businesses based on collateral security. What about a small business who does not have adequate capital, but is confident and has the potential to be a successful businessman? Well, you need not worry!!! There are companies like Indifi who believe in making small businesses with potential growth, by offering Shop Loans or Business Loans based on their creditworthiness and minimum documentation.
With different interest rates and flexible repayment options, Business Loans / Shop Loans are becoming an attractive proposition to the business owners. The loans get processed within the fastest turnaround time, and disbursals happen within 24 hours if the creditworthiness of the potential client and past and present performance of their business meets the required criteria.
Check your eligibility criteria to avail a Business Loan / Shop Loan
While many criteria are required for availing a Business Loan / Shop Loan, I am listing down top seven, which in my opinion hold a lot of weightage towards approval and disbursal of loan.
- Credit score and credit history is dependent on your existing loans’ repayment history. Timely repayment of loans increases your credit score, leading to increased eligibility.
- The lender may ask you for your document proofs, and financial records evidence like income tax returns, bank statements, and financial statements. Therefore, ensure that it is kept ready.
- A healthy Business plan is one of the most vital documents to avail a Business Loan or a Shop Loan. You need to ensure –
- An adequately documented Business plan, as this will be a deciding factor for evaluation and acceptance of your Business loan/ Shop Loan request.
- It should include a financial plan for the next three to five years with profitability indicators.
- LTV (Loan to Value) Ratio is a measurement of the value of property vis a vis the size of the loan. The financier will decide to lend a percentage of amounts of the LTV.
- DSCR (Debt Service Coverage Ratio) helps in gauging your capacity of repayment of the loan after covering all other expenses. Acceptable scores can range from 1 to 1.25.
- NOI (Net Operating Income) determines the actual requirement of the Business Loan / Shop Loan. The higher the net operating income, the better it is for you.
- The lender always checks the credibility of a person, businessman or an entrepreneur. Management effectiveness is also an important criterion. This medium will help the lender in understanding the repayment capacity of the borrower.
Other essential requirements that you need to know –
- Minimum turnover of the shop should be more than INR 10 lakhs.
- ITR filed by the shop owner in the last 12 months should be more than INR 2.5 lakhs.
- The shop and residence of the shop owner should not be the same.
- The shop must be operational for the previous two years.
- PAN card and photographer of the shop owner.
- Bank statement of the shop accounts for the last 12 years.
- ITR filed for the last three years.
- Shop proof.
- Residence address proof.
For further details on eligibility and documentation requirements for a Business Loan / Shop Loan, please check the website – www.indifi.com
Let’s conclude by saying Future is bright for small businesses, especially shop owners and retail business because your dreams can now be culminated into growth, by availing Business Loans / Shop Loans without security. Please check the website www.indifi.com for specific document requirements for availing loan through Indifi.