As reported by the IBEF, FDI inflow in the retail sector reached a substantial US$ 2.17 billion between April 2000 and June 2020. Further, the retail industry will supposedly add more than 39 million square feet of space in India by 2022. The number is likely to go up in the near future, thanks to changing customer preference, increased disposable income, economic growth, etc.
Thus, it is high time for small business owners to expand their outreach. A shop loan, which is a type of business loan, can help in this regard offering ample opportunity for business development. Generally, it is unsecured credit, and prospective or existing shop owners can avail of this credit to set up a new shop or work on their current one.
How to effectively use a shop loan?
Although shop owners can use this fund for any purpose they need, listed below are ways to help them spend the fund for a better outcome.
1. Expansion and renovation
Like any business loan, individuals can use this fund to finance the expansion and renovation of their shop space. They can also make space for a new product line, setting up equipment, etc.
Shop owners can also set up a new branch of the shop at a different city with this credit, increasing their outreach.
2. Marketing and branding
Brand visibility plays a crucial role in the expansion of a company. Irrespective of the business size, it is vital to invest in marketing and advertising from time to time. It helps the business owners attract a new customer base while keeping the existing customers hooked.
This is a crucial aspect for individuals wondering how to build their business brand. In addition to a periodical improvement in marketing, shop owners also need to focus on its promotion when they plan to launch a new service or product in the market. A shop loan will also help them generate increased return on investment (ROI).
3. Replenish the working capital fund
Since working capital is the driving force of an enterprise, business owners need to have adequate capital in hand to ensure a healthy cash flow. Moreover, one needs to pay salaries, restock raw materials, pay overhead expenses, etc., from this fund only. Thus, they can utilize a shop loan to replenish working capital funds when in a cash crunch.
However, before approaching a lender, you need to know how much working capital your business needs to avoid taking more than you can repay.
4. Purchase inventory
Although several types of business loans are available in the market, this credit customised for shops covers almost all expenses incurred while purchasing new inventory for the shop.
By utilising funds from this loan, shop owners can improve their productivity to a great extent. However, to maximise benefits, they also need to know about all the latest technology that would contribute to the overall growth of their business.
Individuals can opt for a shop loan of up to Rs.45 lakh from a reliable financial institution like Bajaj Finserv. It accompanies an array of features like Flexi loan facility, part-payment without charges among several others.
This NBFC also extends pre-approved offers that make the entire loan processing hassle-free with minimal documentation. Besides business loans, such offers are also available on an array of financial products like personal loans, credit cards, and many more.
5. Hiring
With the overall growth of a business, shop owners need to increase their workforce and hire seasonal workers to take up a new project. Paying the salaries to them constitutes a major liability.
In such cases, a shop loan proves to be beneficial such that one can use this to cover added expenses, besides investing in the shop itself. Moreover, paying overtime can also include in this fund that further helps with employee retention.
On top of that, using this fund, they can finance soft skill development or train new joiners to improve the productivity and efficiency of the business.
That being said, individuals can use their shop loan for other purposes as well, depending on their varying requirements. In any case, they can ensure the growth of their business by availing this fund. However, remember to check the eligibility for this loan before applying to a lender.
