Business Loan Against Property: Overview
Setting up a business venture can be fraught with stumbling blocks – financially and otherwise. As a first-time entrepreneur, you might face hurdles even while trying to secure loans. At such times, a start-up business Loan Against Property can provide financial assistance of a substantial amount necessary to flag off a new company.
A start-up Loan Against Property (LAP) requires you to place any residential or commercial unit that you may own to avail of the funds. It can be used for any purpose as per need with attractive repayment options.
Key Differences Between a Start-up Loan Against Property and Business Loan
A start-up business Loan Against Property is a secured loan that has no end-use restrictions. It differs from a business loan in the following ways:
- In the case of a start-up business LAP, one must pledge some collateral as security. Hence it is a secured type of loan; unlike unsecured loans like business loans or personal loans where no security is provided.
- The rate of interest on a Loan Against Property for a start-up business is competitive as compared to a business loan.
- A start-up business LAP can be availed with a longer repayment tenor while a business loan is offered for a shorter duration.
Benefits of a Start-up Business Loan Against Property
A start-up Loan Against Property offers several advantages making it the ideal choice for borrowers who wish to secure sizeable funds for their business needs. These include:
High Loan Principal
Despite a rapid increase in the number of government schemes aimed at financing small businesses, a start-up LAP may present a reliable alternative when one needs considerable sums of money. You can obtain a significant percentage of the pledged property’s market value as loan, which can easily run into a few crores.
Nominal Interest Rates
Secured loans like a business LAP are tendered with lower interest rates as they carry fewer lending risks. Lenders bank on the collateral which serves as an assurance for loan repayments. Usually, secured loans do not stretch your finances when compared to other credit options. Nevertheless, one should research other loan offerings available in the market to get the most economical rate of interest.
Flexible Repayment Tenors
A Loan Against Property is among the best start-up business funding solutions as it allows you to comfortably pay back the loan over a longer tenor. Consequently, one can opt for EMIs within reasonable limits.
Simple Eligibility and Documentation
Start-ups can successfully secure high-value loans with simple eligibility and documentation requirements since loan eligibility is not solely dependent on their income.
Easy Pre-Payment and Foreclosure Norms
Borrowers can make partial pre-payments on their loans to bring down the overall cost of credit. They may even foreclose the loan before the end of the agreed tenor. However, lenders might levy nominal charges for these services.
Hassle-Free Loan Disbursal
Since it is a secured loan, the processing time is much less for a start-up LAP and one can expect quick disbursal of the loan amount.
Eligibility Criteria of a Loan Against Property for Start-up Business
If you are looking to borrow a Loan Against Property from Bajaj Housing Finance, there are some basic eligibility considerations that one must fulfil such as:
- The borrower should be a residing citizen of India
- They should ideally have a CIBIL score of 750 and above
For Salaried Applicants:
- Borrowers should be between 28 to 58** years of age
- They should be employed in a public or private organisation with a minimum work experience of 3 years
For Self-Employed Individuals:
- They should be in the age group of 25 to 70** years
- Borrowers should have a business vintage of 5 years in the current enterprise
**Note that the maximum age limit is the age at the time of loan maturity.
Documents Required for a Mortgage Loan for Business
Depending on the employment profile, loan applicants will need to submit the following documents:
- KYC documents like PAN card, Aadhar card, passport or driving license
- Proof of residence
- Bank account statements for the previous six months
- Income tax returns for the latest financial year
- Proof of ownership such as a partnership agreement
- Profit and loss statements
- Property documents
Note: This is an indicative list. Lenders may ask for additional documents during loan processing.
How to Apply for a Start-up Business Loan Against Property with Bajaj Housing Finance
Interested individuals can apply for a start-up LAP either by visiting the preferred lender's branch office or submitting the loan application on their official website. Given below are the steps that will assist you in applying for the loan online:
- Click on the ‘Apply Now’ button on the Loan Against Property page
- Fill in the mandatory fields and tick wherever required
- Once your contact number is verified with an OTP, you can press the ‘submit’ button.
- Once you submit the loan application form online, representatives from the sales office will contact you and take the loan process forward
After processing the application, they will inform you whether the loan request has been approved. Thereafter, the sanctioned loan amount will be disbursed to your bank account without any delay.
Starting a business can be an expensive proposition owing to the endless list of things that need to be purchased and set up. Obtaining a start-up business Loan Against Property ensures that you meet these requirements without the added pressure of arranging additional funds. At the same time, borrowers can continue to reside or use the property placed as collateral without any hindrance while they repay the loan.
*Terms and conditions apply.
