Shop Purchase Loan

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.

Interest Rate For Shop Purchase Loan

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:

Interest Rates 11.99%* p.a. onwards
Repayment Tenure Up to 10 years
Loan Amount From ₹10,000 to ₹2 Crore
Processing Fees 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.

Looking for a business loan?

List of Banks/NBFCs Providing Shop Purchase Loans

Here are the top banks and NBFCs that offer loans for shop purchases. Compare and choose the lender that best suits your financial needs:

Banks & NBFC Loan Name Key Features
Indian Bank My Own Shop Loan
  • For individuals, professionals and businesses
  • Funding up to Rs. 50 lakhs
  • 25% margin contribution
  • Repayment up to 10 years
PNB Housing Commercial Property Loan
  • For salaried and self-employed
  • Interest 10.25% - 11.10%
  • Funding up to 70% of property value Repayment up to 15 years
HDFC Bank Non-Residential Premises Loan
  • For self-employed professionals
  • Interest 9.65% - 10.90%
  • Funding for office/ clinic purchase
  • Repayment up to 15 years
DHFL Commercial Property Purchase Loan
  • For individuals, partnerships, companies
  • Collateral is property purchased
  • Processing fee 1-2% plus GST
  • Repayment up to 15 years

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Note- The interest rates mentioned are subject to change. Do visit the website for more information.

Eligibility Criteria For Shop Purchase Loan

Before you apply for a shop purchase loan, ensure you meet the required eligibility criteria. The requirements are as follows:

  • Age: Must be at least 18 years old and not exceed 65 years old at the loan term's end.
  • Business Type: The nature of your business cannot be on any blacklist of restricted or prohibited activities.
  • Business Location: Your business address must not be located in an area designated as "negative" by the lender due to risk factors.
  • Business Established: Your business must have been operating for at least 6 months at the time of application.
  • Financial History: You must have a clean financial history with no history of defaults on any loans or financial obligations.
  • Credit Score: A credit score of above 700 is required to be eligible for a shop loan.

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EMI Calculation For Shop Purchase Loan

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)

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.

Monthly EMI 86
Principal Amount 1,000
Total Interest 32
Total Amount 1,032.00

Year Month Principal (A) Interest (B) EMI (A+B) Balance 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:

  • Step 1: Visit or Download & install the Buddy Loan app (Android or iOS).
  • Step 2: Open the business loan application page. Enter your mobile number and OTP.
  • Step 3: Specify the desired loan amount and email. Next, choose the Business Loan option.
  • Step 4: Choose if you have a Business Proof (Yes/ No)
    • If ‘Yes’ (If you have a business proof), enter your business and personal details.
    • If ‘No’ (If you do not have a business proof), choose the profession type and enter your personal details.
  • Step 5: Provide income details and Click the ‘Submit’ button.

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Frequently Asked Questions

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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