A shop purchase loan is a type of financing that can help you buy a commercial property for your business. This loan provides funding for individuals who wish to buy a commercial property/ retail space to establish their shop or business.
Shop purchase loans typically have longer terms than traditional mortgages, and they may also have higher interest rates.
Research and compare offers from multiple lenders before committing to a shop purchase loan as the loan amount is typically determined based on the value of the property being purchased & the borrower’s creditworthiness. Here is the overview of general interest rates and charges for a shop loan:
11.99%* p.a. onwards
Up to 10 years
From ₹10,000 to ₹2 Crore
Up to 4% of the loan amount
Note: The interest rates are subject to change and are based on the borrower’s creditworthiness.
What interest rates are typically offered for loans on commercial shop purchases?
Interest rates for commercial shop purchase loans can vary but are typically influenced by factors such as creditworthiness, loan terms, and market conditions.
To calculate the EMI (Equated Monthly Instalment) for a shop purchase loan, you'll need the following information:
Loan amount: The total amount of the loan you plan to take for purchasing the shop.
Interest rate: The annual interest rate offered by the lender.
Loan tenure: The number of years for which you plan to take the loan.
Once you have this information, you can use the following formula to calculate the EMI:
EMI = P*r*(1+r)^n/((1+r)^n-1)
Where: P = Loan amount r = Monthly interest rate (annual interest rate divided by 12 and then by 100) n = Loan tenure in months
Online business loan EMI calculators are convenient tools that allow you to quickly and easily calculate the EMI for a shop purchase loan. They provide a user-friendly interface where you can input the loan amount, interest rate, and loan tenure to obtain the EMI amount.
Loan Paid to Date (%)
Documents Required For Shop Purchase Loan
Regardless of lender specifics, you'll typically need these core documents for your shop loan:
Identity proof: Government-issued photo ID like PAN card, passport, driver's licence, or Aadhaar card.
Address proof: PAN Card, Utility bills, bank statements, or rental agreements..
Business registration documents: Business license, partnership deed (if applicable), etc.
Financial statements: Income statements, balance sheets, and cash flow statements for the past 2-3 years.
Tax returns: Personal and business tax returns for the past 2-3 years.
Bank statements: Business bank statements for the past 6 months to 1 year.
Collateral documents: If you're offering assets as security, provide ownership documents for equipment, property, or inventory.
How much loan can I get for buying commercial property?
You can loan up to ₹2 crore for buying commercial property depending on factors such as your business financials, creditworthiness, the value of the property, and the lender's criteria.
Benefits of Financing Your Retail Shop
Financing your retail shop can offer several benefits, including:
Expansion Opportunities: Financing can provide the capital needed to expand your retail shop, whether it's through opening new locations, increasing inventory, or adding new product lines.
Working Capital: It can provide the necessary working capital to manage day-to-day operations, cover expenses, and maintain a healthy cash flow.
Flexibility: Financing options can offer flexibility in terms of repayment schedules and loan structures, allowing you to choose the option that best fits your business needs.
Competitive Advantage: With additional funds, you can invest in marketing, technology, and customer experience enhancements, giving you a competitive edge in the retail market.
Asset Acquisition: Financing can help you acquire assets such as equipment, fixtures, and technology that are essential for your retail business.
Tax Benefits: Depending on the type of financing, there may be tax benefits associated with the interest paid on business loans.
Choosing The Right Lender for Shop Purchase Loan
When choosing the right lender for a shop purchase loan, it's important to consider several factors to ensure that you're making an informed decision. Here are some key considerations to keep in mind:
Loan Terms and Conditions: Compare the terms and conditions offered by different lenders, including interest rates, loan tenure, prepayment penalties, and any additional fees. Choose a lender that offers favorable terms that align with your financial goals.
Loan Products and Specialization: Some lenders specialise in specific types of loans or industries. Look for a lender that offers loan products catered to the needs of retail businesses and has experience in financing shop purchases.
Customer Support: Consider the level of customer support provided by the lender. Responsive and knowledgeable customer service can make the loan application process smoother and provide ongoing support throughout the loan term.
Flexibility: Look for a lender that offers flexibility in loan structures, repayment schedules, and eligibility criteria. Flexibility can be valuable in meeting the unique needs of your retail business.
Interest Rates: Compare interest rates offered by different lenders to ensure that you're getting a competitive rate that fits your budget and financial capabilities.
Application Process: Evaluate the ease and efficiency of the loan application process. A streamlined application process can save time and reduce administrative burden.
Steps To Apply Loan For Shop Purchase
Follow the below-mentioned steps to apply for a business loan for purchasing shop:
You can apply for a commercial shop purchase loan at banks, credit unions, online lenders, and specialised commercial real estate lenders.
Factors such as credit score, business financials, collateral, down payment, and business experience can determine eligibility for a commercial shop purchase loan.
Yes, it is possible to obtain a loan for commercial property, including retail shops, office spaces, and other types of commercial real estate.
Yes, you can obtain a construction loan to finance the construction of a commercial shop or retail space.
A commercial purchase loan is a type of loan used to finance the purchase of commercial real estate, including retail shops, office buildings, and industrial properties.
Yes, a shop purchase loan can be used to finance the acquisition of a retail space for starting a new business or expanding an existing one.
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