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What Is A Loan Against Property (LAP)?
Documents Required to Enhance Business Startup Loan
Features and Benefits of Startup Loan
Loan Amount for a Startup Loan for New Business
An aspiring entrepreneur needs capital to kick-start a business. Not all who dream of
starting/expanding a business have
the cash immediately available to start business activities. Individuals rely on various
kinds of loans like loans
against gold jewelry, personal loans, loan
against property, and so on to fund capital requirements. Let us see whether
using a loan against property for business is one of the most appropriate startup
business loans and a suitable way to
initiate a business or not.
A loan against property for startup is a secured type of personal loan. It has the
features of a personal loan with the
difference that the borrower provides collateral for securing the loan. The loan against
property for a business startup
differs from a personal loan in the following manners:
These factors make a loan against property the most appropriate choice for borrowers to
raise capital for their new
Some basic documents are needed to avail of a start-up business loan. Some of the
documents a borrower must keep handy
to enhance the loan eligibility for startup loan are as follows:
To help understand the advantages of availing of a loan against property, here are some
of the features an aspiring
borrower must know of:
A lending institutions' risk is reduced as any losses incurred can be recovered by making
a legal claim on the
borrower's property. The secure nature of the loan is primarily the reason why lending
institutions offer a nominal
startup loan interest rate. The same benefits cannot be enjoyed on collateral-free
Once a borrower submits the documents, the chosen lender verifies the property and
approves the loan. The approval step
is followed by the disbursal stage. Aspiring borrowers can expect fast business loan
Borrowers can avail of a startup loan online. To do this, the borrower has to visit the
lender's official website via
the lender's mobile app. A borrower can also avail of a loan for startup from loan
aggregators online. Online small
business loans startups demand minimum documentation and can be uploaded for
To avail of a startup loan for a new business, here are some of the startup loan
eligibility criteria a borrower must
make a note of:
The maximum loan amount for a loan against property for business is based on two factors.
The Value of the Property – Banks, typically, banks give a loan against property in the range of 70% to 75% of the value of the property.
The Repayment Capacity – Lending institutions emphasize the startup loan repayment capacity. If a borrower is already earning rental income on
the property, it could serve as a bonus.
However, the borrower needs to prepare a strong and comprehensive business proposal to convince the lending institution
of the fact that the business can generate the income needed to service installments for the startup loan for new
A loan against property for business startup is a secured loan, so it is easy to obtain it with limited formalities like
KYC documentation and furnishing property documents. A borrower must evaluate the advantages and disadvantages of
availing a loan against property as if they fail to repay the loan against property there are high chances of losing the
property. It is, thus, imperative that the borrower's income is consistent and high enough to successfully service the
loan against property for new business.
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