A loan for the shop is offered by many lenders in India. A loan for shopkeepers can be used for a number of purposes. However, the shopkeepers must know the purpose of the loan before availing it. And so, they must know the different types of loans and the purposes for which they can be availed. In this blog, we shall discuss the different uses of loan for shopkeepers so that you can use the loan amount effectively.

A loan for the shop is specially designed to help shopkeepers in India meet their various financial needs. No matter what shop you are running – a mobile shop, medical shop, or even a Kirana store, a loan for shopkeepers can be extremely useful for. If your small retail business is having liquidity problems, you can avail a shop loan to help your business grow.

Apply for Working Capital Loan

Many shopkeepers think that if their shop is running well and generating good profits, they do not require a loan for the shop. Nonetheless, such is not a case. Even after generating a good amount of profits, a shopkeeper not necessarily can take out some money from the profits to invest in a new shop. It can have a negative impact on the cash flow of the small business. Nevertheless, expansion of business is also something that every business owner has in his mind.

So, a lack of funds must not keep them away from expansion. To overcome this situation of lack of working capital or capital for investment, there is a business loan for traders and shopkeepers in the market. These loans are offered by different lenders in India. In addition, they are offered at different eligibility criteria and documentation. It must be noted that every lender has a different document requirement and eligibility criteria.

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So, before going any further, let us first talk about the basic eligibility and document requirements.

Eligibility for Loan for Shop

loan for shop

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The following is a generic list of the eligibility criteria for a loan for small shopkeepers:

  • The minimum turnover of the shop in the last year must be equal to or more than INR 10 lakhs.

  • The ITR filed by the shopkeeper in the last 12 months must be equal or more than INR 2.5 lakhs.

  • If the shopkeeper is availing a collateral-free loan, the shopkeeper must either own the shop or house.

  • Also, the shop must be separate from the residence of the shopkeeper.

  • The shop must be in operations for at least last 2 years.

Documents for Loan for Shop

loan for shop

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The following are the documents required for a business loan for traders & shopkeepers:

  • PAN card and photographs of the shopkeeper.

  • The bank statement of the account linked with the shop for the last 12 months.

  • ITRs filed in the last 2-3 years.

  • Shop place and residence address proof.

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Now, let us read how to use a loan for a shopkeeper in Delhi and other cities:

How to use a Business Loan for Shopkeepers?

A personal loan for shopkeepers can be used effectively in the following ways:


loan for shop

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In order to strive and thrive in today’s world of competition, marketing has turned an essential part of the business. So, a shopkeeper can use the funds availed under a loan for the shop for advertising and marketing purpose. He can use the funds to market his products and shop and attract more customers for increased sales.

One of the most effective marketing strategies is discount offers. Discount offers not only to attract customers but at times also lead them to buy more products than their actual requirement.


loan for shop

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And when we talk about offering discounts, you must be prepared with extra inventory. In addition to being prepared with extra inventory, a loan for the shop can also be availed to buy inventory in the off season – when the manufacturers and traders offer products at comparatively lower amounts.

You can also add a new line of products. Introducing a new line of products can also lead to increased sales. However, it is suggested to introduce products that are complementary to your already existing product line. For instance, if you have a mobile shop. You can start selling sim cards, mobile phone covers, and even DTH recharge coupons. However, introducing an absolute different product line, such as stationery products makes no sense.

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Working Capital

loan for shop

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Working capital is important for the smooth running of the business. Working capital is required to manage the everyday operations of the business. It includes paying salaries, utility bills, rent, and other recurrent expenses. A shopkeeper may have a lack of funds due to high bill receivables.

Apply for SME Loan

There are many times when customers buy products in advance and pay for them later. However, this can affect the liquidity of the shop. So, in such scenarios where the shopkeeper does not have adequate working capital, he can avail a working capital loan.


loan for shop

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Expansion of business is the ultimate aim of every businessman. A loan for the shop can be used for the expansion purpose. The shopkeeper can buy a new shop or start selling a new product line. In addition, it can also be used to start a new branch in a different city.

Also, as said in the above example of a mobile shop and stationery products, he can expand business by selling a new and different product line (stationery products) in a new shop.

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