Loan Against Property For Business Startup resource-Banner_WC

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5 Min 22 Jun 2022
Highlights
  • Documents Required
  • Features and Benefits
  • Eligible Loan Amount

An aspiring entrepreneur needs capital to kick-start their business. Individuals rely on various kinds of loans, such as loans against gold, personal loans, and even a Loan Against Property, to fund capital requirements. A Loan Against Property for a business startup makes for an apt choice for a business loan, given its sizeable sanctions. Read on to know more.

A Loan Against Property for a startup business is a secured loan that can be utilized without any end-use restrictions moreover it also differs from a personal loan in the following ways: 

  • Seeking a Loan Against Property as a startup loan for small businesses would involve providing collateral to the lender for securing the loan
  • The rate of interest rate on a Loan Against Property for business is more competitive than that of a personal loan
  • A Loan Against Property has an extended repayment period of up to 18 years, unlike a personal loan 

These benefits make a Loan Against Property the most appropriate choice for borrowers who wish to raise funds for their business.

Features and Benefits of Startup Loan Against Property 

To help understand the advantages of availing of a Loan Against Property, here are some of the features an aspiring borrower can benefit from:

  1. Competitive Interest Rate

    The secure nature of the loan is the reason why lenders offer attractive property loan interest rates. The same benefits cannot be enjoyed on collateral-free loans.
  2. Quick Processing

    Once a borrower submits the documents, borrowers can expect a speedy approval and disbursal process, provided their documents and profile pass the lender’s verification requirements.
  3. Minimal Paperwork

    A borrower can visit the lender's official website and check all the documents that they need to submit, to be better prepared. Usually, lenders ask for minimal documents to facilitate faster processing.

Documents Required for Startup business Loan

of the documents a borrower are asked to submit are as follows: 

  • KYC documents such as PAN card, Aadhaar card, passport, or a driving license
  • Proof of address
  • Bank account statements of the last six months
  • Proof of ownership such as a partnership agreement
  • P&L statements

Note: This list is indicative. Additional documents may be needed during loan processing.

Loan Against Property Eligibility Criteria for Startup Business

To avail of a Loan Against Property for a new business, here are some of the eligibility parameters that applicants are expected to meet:

  • The borrower must be a residing citizen of India
  • The borrower's CIBIL score should ideally be 750
  • If the borrower is salaried, then their age must fall between 28 to 58 years 
  • If the borrower is already self-employed, then their age must fall between 25 to 70 years

Do note that most lenders consider the maximum age at the time of loan maturity.

Read More: Easy Ways to Pick the Right Loan Against Property Tenor

How to apply for Startup Loan Against Property

Loans for Startup businesses can be availed by keeping your property as mortgage. Getting a Loan Against Property is actually a financially viable way to fund your business needs at a low interest rate as your business will most likely grow out and you will be able to repay your loan from the profits your earn. To apply a business startup loan, you firstly need to have a well-drafted business plan in place. Secondly, you need to qualify the age, income and other criteria set by the lender. Lastly, you need to have the confidence that your business will certainly grow into a profitable one. 

Here are 5 Reasons Why You Should Use a Loan Against Property to Start your Business 

Getting your business to start requires the push that can be given only in the form of a considerable bulk of money. As such, Loan Against Property can certainly help in various ways. Here are 5 of them. 

  1. It is more cost-effective than personal loans – While you can use personal loan to fund your business need, you may incur a slightly higher amount considering the interest rates.  
  2. You can live in your mortgaged property – Your property is yours to stay throughout the duration of the Loan. So, live freely and thrive. Mortgage only applies when you fail to repay your loans, which you most likely won’t if you have a stable business. 
  3. You can obtain large sums – You can get a loan against property for amount as high as Rs. 5 Cr* and above basis eligibility.  
  4. You can get the loan easily - Since you are offering your property as collateral, the lender has a good enough security in case you fail to make full repayment.  Hence, they provide such loans rather conveniently to the borrowers.  
  5. You can opt for a longer tenor – The tenor for LAP for startup business goes up to 18 years. You can stretch your EMIs accordingly.

Final Thoughts

A Loan Against Property for a business startup is a secured loan, so it is easy to obtain it with limited documentation and competitive interest rates. However, it is imperative that the borrower's income is consistent to successfully service the Loan Against Property for their new business.

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