Business Loan for Grocery Store

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India has a very unique and diverse grocery business. The grocery business is operated by small shops called Kiranas. There are various channels of operations such as small shops, to large stores and online stores. In today’s trend, the online market is dominated by large super online stores such as Amazon and Big Basket, etc. However, the grocery business in India operates in an unorganized sector. There are around 12 million small shops, which accounts for 90% share of the FMCG market. This market is bound to increase to the US $ 810 billion by early 2020. The diverse market is due to the presence of diverse customer choice and presence.

Documents required for obtaining a business loan

  • Any government authorized address proof 
  • Any government identity proof 
  • Bank statement for a minimum of 6 months 
  • Credit details and your debt obligation details if any
  • Net revenue generated and profit statements
  • PAN Card
  • Recent passport size photograph
  • Registration of Shop and GST
  • A tax return filed for at least previous 2 years 

Why FlexiLoans for Business Loans 

  • Anyone who is having a private company, self-employed individuals, partnership companies, and proprietors, and doing services, manufacturing or trading, can apply for loans. However, needs to satisfy FlexiLoans criteria for eligibility.
  • There is no collateral or guarantee or security required for availing loans. Even there is no requirement for a guarantor.
  • Those interested can check online for their eligibility.
  • We provide up to 1 crore and disburse the loans quickly
  • Pre-mature closure of the loan is allowed.
  • No paperwork is involved, everything is done online.

We would want you to understand the grocery business model before you approach us for a loan. Continue reading to know more about how to start a grocery business.

The Grocery market in India

Globally, the grocery market is increasing and undergoing a lot of changes. India is 6th largest in the grocery market and there is a high growth potential due to the population rise and rise in income growth. Over 69% of the trade market is due to grocery business and all the traders can tap this enormous potential. 90% distribution of the grocery market is done by the local grocery shops. To tap the potential many large retail supermarkets are trying to establish them and to increase their consumer base, but still, the local shops dominate this market.  

Online grocery supermarkets:

Due to the internet boom, changes in the lifestyle and increase in income the online supermarket is growing tremendously in today’s world. This is mainly contributed by India’s huge young population with an average age of 27.6 Years. Due to this, the online market has seen a dynamic environment to grow, with the rise in population, rise in spending income and internet savvy population with busy lifestyle wants to order grocery online.

For starting a grocery shop you need to remember some points. They are given below,

Organization of Business 

Business organization also referred to as a legal entity, is about the type of ownership the business has. To make your grocery shop grow well you must make the right decision about the business organization. Which is very important and it shows a long term growth too.

  • Partnership
  • Less responsibility partnership
  • Sole proprietorship
  • One person company
  • Public limited company 
  • Private limited company

These are the six options provided.

Are you going to choose Sole proprietorship? If yes good guys you have done a great job. That’s the best option or structure in the early stage of business this most opted choice by future grocery shop owners. You can have the control of the shop if you choose this structure and this means limited legal compliances.

You can mark a store under sole proprietorship in the nearby local municipal office. You need not pay any extra amount for this and with the grocery shop, you must enroll your current account in a bank. In the case of you choosing sole proprietorship, there will not be any corporate taxes imposed. 

Contract of lease

Running a grocery store is different from renting a house for living. Hence, the contract of lease for the grocery store needs to be signed with the landlord and it is different from the rental agreement signed for living. There will be a legal issue if you do not sign the contract of lease with the landlord. This is signed as per the rent control act of the states. The contract of the lease must contain the following things in the agreement. They are as follows:

  • Alteration of shop structures
  • Amount of payment or the total cost
  • Rental charges, deposits and maintenance charges
  • Codes and rules compliance
  • Consequences or Penalties of breach of contract
  • Registration and Licensing 
  • Name and Address of both landlord and tenant
  • Permission to sublease 
  • Terms and conditions of renewal of the lease agreement
  • Working hours of the store

Trade License

Any trader is vault by law to attain a trade license before commencing his trade and as the proprietor of a grocery shop, you too are anticipated to attain this license to make sure that your shop stands for by all regulations, standards, safety, and ethical norms. You need to obtain a trade license from the nearby local municipal authority for your grocery shop.

There are three kinds of trade and businesses for which a trade license is mandatory, they are-

  • Any trade which uses motives like factories, manufacturing industry, flour mills, power looms, and cyber cafe, etc
  • Any business which deals with the sale of food such as hotels, restaurants, grocery shops bakeries, canteens, and food stalls.
  • Any dangerous and offensive trade such as the sale of firewood and timber wood, cracker manufacturer and candle manufacture.

Legal technicalities for obtaining a trade license

There are some technicalities in getting the trade license. The trade license is provided by the municipal authority for the grocery shops and it is mandatory. You need to obtain the license within 30 days of starting the shop from the municipal authority. Every state has its own rules for obtaining the license.

The process is very simple and usually it takes 8 days to obtain the license, however, it may take little longer if your documents are not tidy. If you violate the conditions laid down in the trade license then it may be suspended or revoked. If your trade causes disturbances to the public or properties or to government, then also the trade license may be suspended or revoked.

Legal compliances to be followed for starting home delivery of grocery items from the shops are as follows.

You can start home delivery of the grocery products to nearby places from your shop. Due to this you can catch more customers and satisfy more customers and increase your profit overall. However, for delivering the grocery to the nearby houses, you need to follow certain rules from the government.

  • First of all, the delivery boy must have a license for the three-wheeler or motorbikes.
  • Second, the vehicles need to be registered as commercial vehicles and not private vehicles. You may be fined severely if you use private vehicles for commercial purpose.
  • Third, there are no laws governing the use of bicycles for commercial purposes. So you can use bicycles to deliver grocery to homes.

Now, we are glad that you are ready and hence apply today and get your loan processed in 48 business hours to start a grocery business.