Requirements to get a shop loan in India

A shop loan is a credit facility used to buy a shop anywhere in India. You can use a shop loan to open any type of shop, be it a grocery store, clothing store, kirana store, retail outlet, coffee shop, medical store, mobile, coffee house, wine, pharmacy, or any other type of business. The loan amounts may vary depending on the nature of the business. The interest rate also varies depending on the lending institution and the applicant's profile.

Features and Benefits

Interest Rate: Depends on business requirements
Loan Amount: Rs. 10,000 to Rs. 2 crore
Processing Fee: Up to 4% of the sanctioned loan amount
Collateral: Not required for unsecured loans
Repayment Tenure: 12 months to 5 years
Foreclosure Rates: Varies from bank to bank

Eligibility Criteria

Age: Minimum 18 years and maximum 65 years
Not a blacklisted business
Business address should not be in a negative location
Business establishment should be at least 6 months old
Applicant should not have defaulted on any loan taken from any financial institution

Required Documents

Passport size photographs
Proof of applicant’s identity, age, address and income
Business address
Duration of business if already established Last 6 months of bank statements Statement
bank statement of last 6 months

Steps to Apply for Shop Loan

Check and compare various loan deals offered by various lenders. Once selected, applicants can choose the loan deal that suits their business requirements by filling and submitting the loan application form online. The concerned lender will proceed with the loan process. After verifying the documents and approving the loan, the loan amount will be disbursed to the bank account provided by the applicant. Applicants can also opt for government loan schemes to purchase shop(s).

Government Loan Schemes

Pradhan Mantri Mudra Yojana (PMMY)

Pradhan Mantri Mudra Yojana (PMMY) is designed to provide financial assistance to micro and small businesses, including shopkeepers. The scheme offers loans in three categories: Sishu (up to ₹50,000), Kishore (₹50,000 to ₹5 lakh), and Tarun (₹5 lakh to ₹10 lakh). Loans can be used for various purposes like purchasing machinery, raw materials, setting up a shop, etc. The best part is that loans up to ₹1 lakh do not require collateral. The interest rates are generally low, the application process is very simple, and it is accessible to small business owners.

Stand Up India Scheme

The Stand Up India Scheme primarily aims to promote entrepreneurship among women and individuals from SC/ST categories. It offers loans ranging from ₹10 lakh to ₹1 crore for setting up greenfield ventures, including opening a shop or small business in sectors like manufacturing, services, or trade. The scheme ensures that at least one woman and one SC/ST borrower get the benefit of the loan in each bank branch. This is a great initiative to help individuals from these specific categories get financing to start their own shops or businesses.

Prime Minister's Employers' Scheme (PMEGP)

The PMEGP scheme is an initiative that helps individuals start new businesses, including shops, by providing financial assistance. Under this scheme, manufacturing units can get loans of up to ₹25 lakh and service units can get loans of up to ₹10 lakh. In addition to the loan, the government offers a subsidy of 15% to 35%, depending on the region and the category of the applicant. This is an attractive option for anyone looking to open a shop or small business, especially if they are SC, ST or women. The scheme has a simple eligibility criteria, which allows entrepreneurs to get the necessary financing to start their businesses.