Loan Against Property for Startup Businesses
Starting up a new business venture is like stepping into stumbling blocks in all aspects, be it physical, mental or financial. For an entrepreneur bringing a new idea to the market, the steps are even more difficult and raising the required funds can be a challenge. At such times, a Loan Against Property designed for startups can provide financial assistance of a substantial amount necessary to flag off a new company.
To avail of a Loan Against Property for startups, you must mortgage any residential or commercial unit that you may own to avail of the funds. It can be used for any business purpose or debt consolidation
Differences Between a Startup Loan Against Property and Business Loan
A Loan Against Property (LAP) for a startup is a secured loan that has no end-use restrictions. It differs from a business loan in the following ways:
- A start-up business LAP is a secured type of loan, as one must mortgage some collateral as security. While in business loans or personal loans, no security is required.
- The rate of interest on a Loan Against Property for a start-up business is more competitive compared to a typical business loan.
- A start-up business LAP can be availed with a longer repayment tenor while a business loan is usually offered for a shorter duration.
Benefits of Startup 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 60 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
**The upper age limit is considered as age at the time of loan maturity. Additionally, the upper age limit for applicants is subject to change, depending on the property profile.
Loan Against Property Documents Required
Depending on the employment profile, loan applicants will need to submit the following documents***:
- KYC documents like PAN card, Aadhaar card, passport or driving licence
- Proof of residence
- Mandatory documents such as PAN card or Form 60
- 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
***Additional documents may be requested at the time of loan processing.
How to Apply for a Start-up Business Loan Against Property
You 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 such as loan amount, tenor, employment type, contact number, net monthly income etc. and enter check marks 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.
Upon completion of all the steps, your application will be verified. On successful verification, the concerned official will inform you whether the loan request has been approved or not. 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.
