Synopsis: Availability or lack of timely and adequate financing can make or break a retail business. So, we enumerate the top 6 financing options which business owners can utilize to take their business to new heights. 

A retail business, irrespective of whether it is hopping on a fresh entrepreneurial journey, or is already a well-reputed business hunting for avenues to expand its operations, will always require funds. The quantum, however, will vary as per the nature and stage of development of the business. 

Shopkeepers and retail business owners typically require capital for purchasing inventory, marketing and advertising their products, and scaling up their operations. Such capital needs can get pretty intensive, especially in the initial stages of the business. 

6 Best Financing Options for Retail Businesses

Below we underline the top financing options which retail businesses alike can explore for raising funds for successfully running their business operations. 

1) Personal Loans 

Personal loans, i.e., loans in the name of the borrower, are among the most popular loan offerings in the Indian credit market due to their versatile nature. A shopkeeper can utilize the sanctioned loan for a variety of purposes, including expansion of store capacity, setting up of a new shop for deeper market penetration, or for simply meeting operational expenses.

Personal loans are generally unsecured, i.e., lenders do not require any collateral and have a flexible tenure, unlike commercial loans. The interest rates charged on personal loans will depend on the borrower’s credit history, income, financial position, etc.  

Shopkeeper/Retail businesses can apply for a personal loan from banks, NBFCs, and online lenders – including Protium. We provide easy personal loans at a nominal processing fee. 

Please note a personal loan is distinct from a personal line of credit, which functions similarly to a credit card. In a personal line of credit, which is another financing option that retail businesses can tap in, available credit is reduced as the business continues to spend for meeting expenses. 

2) Business Loans/ Lines of credit 

A retail business can avail of a business loan if it is well-established and financially sound. Such business loans are offered both for short-term and long-term periods and are usually backed by collateral when sourced from banks. However, Protium offers MSMEs business loans without any requirements for collateral or a thick credit file. 

Retail businesses can also opt for a line of credit when they are unable to meet the stringent criteria which are applicable for a business loan sanction. A business line of credit is a revolving facility where the borrower is liable to pay interest only on the amount withdrawn and not on the entire loan limit. This easy withdrawal and repayment facility makes a line of credit a decent financing option when looking to raise credit for a long-term duration, lasting 10-15 years. 

3) Loan Against Property (LAP) 

Another financing option that shopkeepers and retail businesses can explore is a LAP, which is a secured loan issued against a property pledged as collateral. Such loans are provided against pre-owned, fully constructed, and titled residential and commercial properties, free of any litigation. Up to 70% of the property value can be sanctioned as a loan. 

Since a pledged asset backs a LAP, the interest rates are meager. However, lending institutions require very high credit scores and a spotless repayment track record to sanction a LAP. At Protium, you can get a Loan Against Property at attractive interest rates with flexible repayment options. 

4) Equipment and Machinery Financing 

Equipment financing can be a suitable financing option for a business involved in manufacturing products. These loans are self-secured, which means lenders have the first charge against the asset in case of a failure of repayment. By availing of equipment finance or a machinery loan, companies can also minimize their tax liability as interest expenses are tax-deductible. 

Protium offers equipment and machinery financing ranging from Rs. 10 lakhs to Rs. 3 crores with a flexible tenure lasting up to 60 months. 

5) Mudra Loans

Another retail financing option is to apply for Mudra Loans under the government’s Pradhan Mantri Mudra Yojana (PMMY). Under PMMY, shopkeepers, business vendors, small-scale manufacturers, and service-based businesses are eligible to avail of an SME business loan ranging from Rs. 50,000 and Rs. 10 lakhs. 

Additionally, retail businesses can also explore loan options under various other government schemes, including Prime Minister’s Employment Generation Programme (PMEGP), Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), Standup India, Startup India, PSB Loans in 59 minutes, etc. The government has been actively pushing for the growth of small businesses and supporting them in scaling up and transforming into large enterprises. 

6) Angel Funding 

Sourcing funds from angel investors is another common financing option that has been utilized by retail businesses for years now. Angel investors are individuals with a staggering amount of wealth who are desirous of investing in high-growth businesses. The Indian angel investing landscape has taken off in the last 5 years, with many investors jumping on the bandwagon of early-stage investing for better returns. 
 
This list is by no means exhaustive. Business owners can additionally turn to peer-to-peer lending and crowdfunding platforms for raising capital. Other financing options, such as invoice financing, business overdraft, working capital loans, and cash advances, can also be employed for meeting short-term needs. 

Protium: A Shopkeeper’s/Retail Business Best Friend 

The final decision about which financing option to zero in on must consider a business’s specific needs, risk appetite, financial position, and tenure. Not all financing options can be equally suitable for a shopkeeper as they may be constrained by onerous eligibility requirements or may find the interest rates prohibitively high. 

In such scenarios, retail businesses and shopkeepers can apply for a business loan at Protium. We offer end-to-end digital disbursement of loans at affordable interest rates with minimal documentation. Call 8828827800 to know more!