How to Open a Furniture Business and Secure Financing for It

Furniture is increasingly in demand in India, driven by the rising standard of living and the growing needs of homeowners. The Indian furniture market encompasses a wide range of products, including wardrobes, chairs, tables, sofa sets, kitchen furniture, and almirahs. This demand provides an excellent opportunity for those with the right skills and talent.

In 2022, the Indian furniture market was valued at approximately USD 23.12 billion. Projections from the Trade Promotion Council of India (TPCI) suggest it will expand at a compound annual growth rate (CAGR) of 10.9%, ultimately reaching USD 32.7 billion by 2026.

To establish a successful furniture business, a significant investment is required across several areas, including setting up the shop and purchasing necessary equipment. You will also need to hire staff and obtain the required licences. Renting space and investing in marketing efforts are also essential for business success.

Careful planning and research is needed for starting a furniture business, followed by finalising your budget. Next, you will need to rent a shop, hire skilled workers, and promote your business directly to clients and to architects and interior decorators. 

Here is a detailed step-by-step guide on how get started:

1. Market Research

Conduct research on current market trends in the furniture industry to drive future sales. Choose services and products offered by your competitors based on the needs of customers in your region and beyond. 

2. Analyse the Target Market

Once you are aware of current trends, decide on the niche you will focus on. This could involve working with commercial spaces, residential areas, or resorts. Determine pricing and prepare your business to fill in market gaps by standing out amongst competitors.

3. Business Planning

Your business plan needs to cover the products you will offer, the production process, target customers, product lines, and other manufacturers involved.

4. Estimate Budget

After planning the initial stages of your furniture business, estimate the overall budget. Expenses could include licences, permits, rent, equipment, salaries, and marketing. These needs can be met through self-funding or by taking a loan for opening a furniture business.

5. Renting Space

Once you have determined your overall budget, start looking for a commercial space for your shop. If you decide to rent, assess the area’s suitability for selling furniture. Choose a location that is easily accessible to customers, offers high visibility, and has transport facilities. 

6. Register the Business Legally

You can register your furniture business as a limited liability company (LLC), sole proprietorship, corporation, or partnership firm.

7. Apply for Licences and Permits

As you begin preparing your shop for operations, another important step is to gather all the necessary legal permits and licences. This will ensure that your business operates smoothly and avoids future legal issues. 

You will need to acquire trade licences, GST registrations, NOC certificates, and permits from the local municipal corporation.

8. Marketing and Promotion

For promotional activities, you can use social media or local advertising methods be it radio or hoardings. This will help your business reach more potential customers and increase awareness.

Some licences required for a furniture business in India include trade licences, trademark registration, GST registration, safety certificates, and environment licences. However, not all of them are mandatory, and some may have eligibility criteria that you need to meet. 

Below is a complete list of licences to acquire with their respective terms.

• Business Registration

Your business needs to be registered with the Indian Government as a legal entity. This can be as a Sole Proprietorship, Partnership Firm, Limited Liability Partnership (LLP), or Private Limited Company.

• Trade Licence

This licence is provided by the local municipal corporation for businesses involved in the trade of goods. It is essential for setting up and operating a shop.

• GST Registration

The Goods and Services Tax (GST) licence is mandatory for businesses with an annual turnover exceeding a specified limit. Depending on the type of business, the threshold may range from ₹10 Lakhs to ₹40 Lakhs.

• Fire Safety Certificate

The furniture business deals with fire and related equipment. Obtain a fire safety licence or NOC permit from the local fire department.

• Trademark Registration

This licence is not mandatory but is recommended to protect your business name, logo, and identity. Registering a trademark prevents unauthorised use of your business name.

• Shops and Establishment Act

This is required for any commercial business or enterprise. As a furniture showroom or shop is a commercial enterprise, you need to register under this act.

• Environment Licence

A business generating waste as part of its processes needs to acquire this licence.

• Design Registration

Exclusive furniture designs, being part of your intellectual property, need to be registered with a design registration certificate.

Establishing a furniture venture in India, whether it's a modest workshop, a physical showroom, or a hybrid manufacturing-retail operation, demands thorough financial planning. Your investment will vary notably based on city tier, business model, and operational scale. 

Here's a structured breakdown aligned with Tier‑1, Tier‑2, and Tier‑3 settings:

City Tier Classification and Cost Dynamics

• Tier‑1: Cities like Mumbai, Delhi and Bengaluru involve significantly higher real estate, labor, and operational costs, increasing required investment.
  

• Tier‑2 and Tier‑3: These cities offer much more affordable options, reducing overall capital at the startup stage. Organised furniture sales are increasingly prominent in these regions.

Disclaimer: The investment estimates provided in the table are indicative and based on general industry trends. Actual costs may vary depending on the specific location, brand, business scale, and operational factors such as real estate prices, labor costs, and market conditions. It is advisable to consult with local experts and conduct detailed market research before making any investment decisions.

You can invest in your business yourself, but you may also consider a business loan to keep your personal savings aside. This loan can help you start and continue running your furniture venture or help you expand and diversify at a later stage. 

Below is a list of some common uses for business loans, their benefits, and the steps to secure a business loan for a furniture business. 

There are numerous ways in which you can use the funds you receive from a business loan. This may include rent, inventory management, or staff salaries. Some of the uses are listed below in detail.

• Operational Costs 

Utilise the funds for operational costs to start a furniture business. This may include spending on production, utilities and rent for the commercial store and factory/warehouse, and transport. 

• Inventory Expenses

Use the funds for purchasing and managing inventory whether you manufacture the furniture yourself or source from others. 

• Staffing Requirements

Your business may not flourish from day one, but the staff you hire will still need regular salaries. To ensure your staff is paid appropriately during the initial months, you may need to rely on a business loan. 

• Unexpected Expenses

Set aside funds for emergencies or unplanned needs, such as repairs, maintenance, and taxes.

The process of obtaining a business loan has become easier with online applications and minimal documentation. Some key benefits of a business loan include tax savings and no requirement for collateral. Here is a brief list of these benefits in detail:

• No Collateral Required

A business loan does not require you to pledge any assets as security to the lender in exchange for funds. This is an unsecured loan, relying on your income, CIBIL score, and other factors. This helps you avoid risking your valuable assets. 

• Variety of Options

Several lenders provide loans tailored to the specific needs of business owners. This flexibility helps you align financing with your goals and fosters business growth.

• Ample Loan Amounts

Many banks and NBFCs offer a vast range in the loan amount to cater to your requirements. The amounts can be substantial, helping you address diverse business needs, be it starting out or expanding into new locations or verticals. 

• Competitive Interest Rates

With so many lenders competing in the financial marketplace, you can repay affordably thanks to nominal interest rates. 

• Quick Disbursal

As the process is entirely online, you can receive the funds quickly and address urgent business needs with ease.

• Tax Benefits

Interest payments on business loans are eligible for tax deductions, which can improve your cash flow.

You can secure a loan amount of up to ₹80 Lakhs with an online application and instant disbursal. Here are the details of partners offering business loans on Bajaj Markets: 

Disclaimer: The mentioned rates are subject to change at the lender’s discretion.

To apply for a business loan on Bajaj Markets, you need to meet certain eligibility criteria. Here is a complete list of the necessary requirements:

• You must be an Indian citizen

• Age limit is from 21 to 60 years

• Your CIBIL score should be good

• You must either be a self-employed professional or a non-professional

• Your business should be registered as a partnership, limited liability partnership, or private limited company

• Your business must be at least 1 year old

• Annual minimum turnover must be ₹1.5 Lakhs as per ITR (Income Tax Return)

You also need to have certain documents ready to prove your eligibility and complete the online form. These documents include:

• Identity Proof: Aadhaar card, PAN card, Voter’s ID, driving licence, passport

• Address Proof: Aadhaar card, utility bills, lease agreement, passport

• Income Proof: Last 6 months' bank statement, income computation, Profit and Loss (P&L) statement, last 2 years' balance sheet, ITR, in addition to certified copies with details

• Business Proof: Copy of Partnership Deed, Certified copy of Memorandum, Sole Proprietorship Declaration, and Articles of Association

When seeking a business loan to establish or expand a furniture business in India, lenders typically evaluate both personal and business creditworthiness. A personal CIBIL score of 700 or higher is generally preferred by banks and Non-Banking Financial Companies (NBFCs), as it reflects responsible financial behavior and reduces lending risk. However, the Ministry of Finance has clarified that banks cannot reject loan applications solely due to a lack of credit history for first-time borrowers. This policy aims to promote financial inclusion and support new entrepreneurs.

For registered businesses, lenders also review the Company Credit Report (CCR), which assesses the company's financial health and creditworthiness. The CCR includes:

• CIBIL Rank: A numerical representation of the company's creditworthiness, ranging from 1 (highest) to 10 (lowest).
  

• Payment History: Records of timely or delayed payments on existing credit facilities.
  

• Outstanding Debts: Details of current financial obligations and credit utilisation.
  

A higher CIBIL Rank (closer to 1) can facilitate easier access to loans with favorable terms, such as lower interest rates and quicker approvals.

To improve your chances of securing a business loan for your furniture venture, consider maintaining timely payments, monitoring your credit reports for accuracy, and managing your credit utilisation effectively. These practices can enhance your creditworthiness and support the growth and sustainability of your business.

To apply for a business loan, you do not need to visit a physical branch. Instead, navigate to the official website or use the Bajaj Markets app. The steps to apply for a business loan include:

• Step 1: Tap the ‘CHECK ELIGIBILITY’ button on this page.

• Step 2: Provide your personal and business information in the application form.

• Step 3: Select a lender from the available options.

• Step 4: Choose your preferred loan amount and repayment term.

• Step 5: Submit your application for evaluation.

The Indian government offers several schemes to support SMEs (Small and Medium Enterprises) and MSMEs (Micro, Small, and Medium Enterprises) venturing into the furniture industry, providing financial assistance, infrastructure support, and skill development programs. The table below highlights key central government initiatives that furniture businesses can leverage to set up, expand, and sustain their operations:

Central Government Schemes for Furniture MSMEs

The Government of India offers several schemes to support Micro, Small, and Medium Enterprises (MSMEs) in the furniture sector:

Disclaimer: The schemes listed under the Central Government section are subject to change based on government policies and eligibility criteria. It is recommended to consult with the respective authorities or financial institutions for detailed and current information before applying.

State Government Schemes for Furniture MSMEs

State governments also offer targeted schemes to support the furniture industry:

Disclaimer: The schemes mentioned in the table are subject to eligibility criteria and may vary based on the location, industry, and government guidelines. It is advisable to consult with relevant authorities or financial institutions for the most accurate and up-to-date information before applying.