Needless to say, regular funding is the basic requirement of every business. The idea of smoothly running your business operations or even expanding them, requires you to equip your business with an appropriate amount of funds. But immediately arranging a significant sum of money from a reliable source is not at all easy, and this lack of funds can actually make you lose a golden opportunity for your business’ growth. However, if you have an idle commercial property under your name, then you need not worry. Today, there are numerous financial institutions that offer you a well-customised loan against commercial property (LAP).
This is a secured form of a loan as the property is offered in the form of collateral or security, and it is the high value of the commercial property that truly determines the loan amount. In addition, since it is a secured loan, the approval process does not take much time and the funds are quickly disbursed in your account. Also, it is important to note that the business owner completely retains all the rights of the ownership of the property as it only acts as the mortgage. But you must remember that the lender can sell the property, in case you fail to make the repayments.
Few advantages of taking loan against property
• Offers a large loan amount – When it comes to supporting diverse business needs, you require a large sum of money, which unsecured loan options can definitely not provide you. With LAP, you can get up to 60- 70 per cent of the total value of the property, which you wish to mortgage. Moreover, this amount can be then freely used for several business operations such as stocking inventory, implementing growth plan strategies and purchasing new equipment.
• Low interest rates – One of the most important advantages of taking loan against property is that you are offered the loan at low rates of interest. With an attractive interest rate, it becomes easier for you to pay the monthly instalments, without experiencing any financial struggle. In addition, if you have an excellent score, then you can even negotiate the rates in your favour.
• Highly flexible loan tenure – When it comes to loan against commercial property, the borrowers enjoy a flexible repayment tenure. A high loan amount can be offered for a tenure ranging from 10 to 15 years. However, it may get majorly affected by factors such as your credit score and your relationship with the financial institution you wish to approach.
• You get pre-closure option – Another noteworthy benefit of this loan is that you can easily repay the entire loan before the period fixed by the lender. With this incredible facility, you can get rid of the liability as per your own convenience as well as the financial situation. But you must remember that some of the lenders may charge you a certain amount of fee for the pre-closure of the loan.
• You get to ensure proper capital all the time – Working capital is the money required for keeping the business afloat and running everyday operations. However, you may encounter various situations such as late payments and unforeseen circumstances that can affect your working capital. To deal with these situations and to ensure your consistent survival, LAP might be just the best solution.
Do you meet the eligibility criteria for LAP?
• For the salaried individuals, the age bar is between 25 and 60 years, and for the self-employed borrowers, it is between 25 and 70 years.
• As per the common guidelines, the minimum monthly income of the salaried individuals needs to be Rs. 24,000.
• The credit score of the borrower must be 750 or above.
• The applicant must reside in the same house for at least 1 year to reflect residential stability.
• You must provide all the relevant documents of your commercial property such as electricity bill, sales deed and other property documents.
To sum up, taking a loan against commercial property for handling different matters related to your business might be the right choice. This is a secured loan, which not only comes at a low interest rate, but is also supported with a long repayment tenure. You just have to meet the points mentioned above to fulfil the eligibility criteria and to quickly seek approval.