A business loan for shopkeeper is a financial product specially designed for shopkeepers. This credit can be availed by small shopkeepers and small-scale traders, including Kirana shops, ready-made garment shops, medical shops, etc. A loan for the retail shop is offered by loan lenders in India- banks, money lenders, NBFCs, and online lenders. These shop loans are offered to promote the shopkeepers financially so that they significantly contribute to the economy of the country. Some reports suggest SME and MSME sector is a major contributor to the Indian GDP and economy.
Let’s take a look at some smart ways through which the shopkeeper can use a shop loan:
Inventory is the most important asset for a shopkeeper. For a Kirana store, household essentials whereas for a medical store medicine can be inventory. To be able to sell inventory, the shopkeeper must have adequate inventory at the store. So, a business loan for shopkeeper can be used to purchase more inventory.
Having said that, it is important to calculate the amount of inventory required at the shop. The shopkeeper must not purchase inventory less or more than the required. In the case of less inventory, the shopkeeper may suffer a loss in terms of low sales. And over optimized inventory can freeze working capital.
also read: how to get an equipment finance in india?
A loan for the shop can be used to purchase equipment or machinery. And in case the shopkeeper already has the equipment, he can buy an updated version. A shopkeeper can make profits in two ways. One by achieving a higher number of sales. And second by keeping the cost of production low. And machinery and equipment play a very important role in keeping the cost of production low per unit. This can happen in several ways:
- New or upgraded machinery is able to produce more units.
- The chances of a defect in produced goods are very low.
A shopkeeper does not only require funds for expansion and growth. It also requires funds to keep the business running. There are several expenses which are recurring in nature and must be met in order to keep the business running in an efficient way. These recurring costs that support the business are called working capital. Few expenses that come under this include utility bills, salaries of employees, insurance premiums, etc.
A loan for the shop can be used to increase or improve working capital. In case the accounts payable is higher than the accounts receivables, a working capital loan can be availed. Also, there are times when payments are urgent to make whereas the accounts receivables are due after a couple of months. In this situation as well, a business loan for shopkeeper can be availed.
Also read: how to refinance a Business Loan?
There are times when a shopkeeper has already availed a business loan. But at a higher interest rate and term. And he wishes to pay it off as early as possible. He can look forward to avail a loan from another lender at lower business loan interest rate and completely pay the first loan. This is called refinancing a loan.
So, a shopkeeper loan can be availed to refinance loan. Notably, it can be availed from another lender or the same lender as well.
Marketing and advertising are very important to survive in the high competition world. It is important to tell your customers about the products and services you provide in order to boost your sales. A shop loan can be availed for this purpose. The shopkeeper can avail a loan to market its products and services.
The shopkeeper can adopt various methods of marketing, including social media marketing. It is the most cost-effective technique of marketing.
Now that you know 5 smart ways of using a business loan for the shopkeeper, you can make the most of it. However, when availing a loan for the shop, you are suggested to choose the lender only after market research and carefully considering all his terms and conditions.