Life is hard for shop owners in India, as they need to compete with multiple small shops, big box stores, and now with giant e-commerce companies. Most small shops have bare minimum capital to purchase inventory, and they are unable to grow after a certain time. On the other hand, few shop owners are able to grow from one shop to five shops. There are a number of reasons why a shop is able to grow quickly, and why most shops are unable to grow beyond their first store.


In our country, India, most shops are owned by Marwaris (individuals from Rajasthan) and Gujaratis in almost all major cities and towns. In Bangalore and other Indian cities, a good number of shops in commercial districts are owned by Muslims, and it is almost impossible for an individual from another religion to open a shop over there. Before calling us racist, it is important to understand the role of religion and ethnicity in business. The locals (individuals who were born in the city/state where the shop is located and speak the local language) constitute about 25-60 % of all shops of a city. Given this demography, the success of a shop depends on shop owners’ community and the support he/she gets from his/her community.


Most Marwaris are able to get loans from their community at a decent interest rates (1.5 – 3 % per month), and their close family members also help them. My parents currently live in Vadodara, Gujarat, and I stayed there for a while. To me, it seems that almost 30% or more of Gujaratis are already running their small or big business, or they plan to do that in the coming years. I have seen very few Gujaratis who retired from government jobs, or want to work for somebody else for the rest of their life. Since their friends and family members are already doing business, they are more inclined to do business. It is relatively easy for Gujaratis to raise capital from their close family members and friends.


The locals in Bangalore and other cities do know a lot of individuals in the city, but they face difficulty in attracting capital to grow their business. In Bihar, the government job is considered a dream job, whereas starting a business is considered a bad idea. I was born in Bihar, and most folks over there think that only individuals who could not get a job start a business. Given these factors and other factors, a number of locals in the city are unable to get loans for their shops. They face difficulty in getting a loan from banks, as banks require past three years of audited P&L statements, and ITR. Also, most banks give loans to businesses that are three or more years old, and have turnover of Rs. 1 Cr.


In Bangalore and soon other cities, LOANMEET ( ) provides unsecured loans to shops. We understand that most shop owners have not filled ITR, and few shops do not have VAT or GST. Still, we are able to process their loan applications, as we use bank statements, and multiple other parameters to make credit decisions. Now, the retailers do not have suppress their dreams just because of their ethnicity and what not. We at LOANMEET will provide the necessary capital to grow revenues and profits of shop owners, and the retailers can just focus growing their business. In the next article, we will talk why big shops keep adding new stores, while small stores are unable to grow their business.