Funding is an important aspect for operating businesses. Funding is not an easy process. Most of the business funding needs are resolved through seeking loans from commercial banks and financial institutions. If you are looking for hassle-free and easy loans, business loans against property can be a good option. LAP can be availed for short-term as well as long term investment needs.
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As the name suggests, it is a business loan customized to finance business ventures. Business loan involves mortgaging property and accessing funds to fuel businesses. The loan can be availed by pledging both commercial as well as residential property.
Loan against property can be availed by salaried employees, businessmen and self-employed professionals. The eligibility criteria of business loan against property are as follows:
Business loan against property is an ideal solution for small and medium enterprises, SMEs, looking for quick loans as they provide multiple benefits that are specially aligned to the needs of the business owners. Listed below are the documents that must be submitted by the applicant:
There are few important aspects that you must consider before applying for loan against property. They are as follows:
The interest rates on secured business loans range from 12% to 14% a year. It is always advisable to check interest rates offered by banks. Look for favorable terms and conditions like flexible repayment options and online account management, before choosing the bank. You can also get expert advice from financial advisors for loans at moderate rates.
Generally, the property that is offered as security helps get a loan that is 60-80% of the market value of the property. Commercial property fetches lower LTV ratio, but again this depends on the bank and factors like, is the property rented or self-occupied.
Loan against property can also be availed by pledging an already mortgaged property. It is one of the benefits of business loan against property. You can avail a loan by using a property on which you have a home loan outstanding.
There are no prepayment charges for loans availed by mortgaging property. The loan can be repaid in full before the tenure of the loan.
SEE ALSO: Loan Against Property Interest Rates
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