A business always deals with some or the other type of financial challenge, be it in working capital management, industry expansion, or unexpected expenditures. In such circumstances, a loan for business purposes against property becomes a potent financial instrument to tackle these issues effectively. Let's explore how a business loan against property in India can help overcome financial hurdles and unlock growth opportunities.
What is a Loan Against Property (LAP)?
A business loan against property is a form of secured credit that permits the borrowing of funds by placing a residential, commercial, or industrial property as collateral. Financial institutions lend a specific percentage of the property's market value, thus offering considerable funds to borrow at reasonably low-interest rates.
How a Loan Against Property Can Help Resolve Your Business Hurdles
Access to Substantial Funds
One of the most significant advantages of a business loan against property in India is that it allows borrowing of a considerable amount. Since the loan is secured against your property, lenders provide higher amounts—typically up to 60-70% of the property's market value. Therefore, LAP is best suited for tackling substantial business expenses like buying new equipment, expanding premises, or managing high-cost inventories.
Lower Interest Rates
The interest rates attached to secured business loans are significantly lower than those associated with unsecured business loans. This makes the overall borrowing much cheaper and keeps your business finances in control, particularly over a more extended period.
Flexible Usage of Funds
No specific purpose is attached to the loans against property; such businesses within India allow one to use the money according to the demands of the business. Whether managing working capital, paying off previous debts, or financing the next big project, funds can be allocated wherever needed most.
Longer Repayment Tenure
A business loan against property in India comes with a longer repayment tenure than other loans. Therefore, the EMIs are smaller that can be synced with your business's cash flow. It imposes less financial stress and allows you to expand your business rather than worrying about the repayment.
Unlocking the Value of Idle Assets
If the property is non-income-generating, a loan against the property allows for some conversion of the asset without selling it. This way, you can retain ownership whileusing its value to meet some urgent financial needs.
Helps Consolidate Debts
A business having several high-interest debts can use a business loan against property as a debt consolidation tool. It allows the removal of all previous debts with one low-interest loan, thereby simplifying the repayment process and enhancing financial stability.
No Impact on Business Equity
Unlike seeking funding from investors, a business loan against property in India does not require you to give up any equity or ownership in your company. This means you can retain complete control over your business and your decisions.
Eligibility Criteria for a Loan Against Property
To avail of a business loan against property in India, you must meet specific eligibility requirements:
Nationality: Must be an Indian citizen with valid proof.
Occupation and income: details of occupation and income that support financial stability.
Credit History: A good credit score is crucial for approval.
Banking Relationship: A good relationship with the bank can lead to better terms.
Market Value of Property: The property's market value must be greater than the loan amount.
Property Title: Should have owned the property with clear title, free of any former mortgage.
Documents Required to Apply for Loan Against Property
Proof of Identity: Aadhaar Card, PAN Card, Passport, Voter ID, or Driving License.
Address Proof: Utility Bills, Rent Agreement, Passport, or Aadhaar Card.
Income Proof:
For salaried individuals: Latest salary slips, Form 16, and bank statements (last 6 months).
For self-employed individuals: Income Tax Returns (ITR) for the last 2-3 years, Profit & Loss statements, and balance sheets.
Property Documents: Title deed, sale agreement, property tax receipts, and other relevant documents proving ownership of the property.
Bank Statements: Bank account statements for the past 6 months.
Proof of Business (for self-employed): Business registration certificate, GST returns, or other relevant documents.
Photographs: Two passport-sized photographs.
Loan Application Form: Duly filled and signed application form.
Final Words!
A business loan against property in India is the best option to describe any business challenge, considering it offers flexibility, affordability, and substantial funding. When you team up with Ruloans, the trusted loan distributor in India, you are guaranteed access to the best deals, hassle-free registration, and growth in your income as a Loan DSA.
Realize your property’s value today and comfortably get over your business challenges. Partner with Ruloans and start receiving lucrative payouts now!
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