How to Avail a Business Loan Against Property in India ?

A business loan against property is a way to raise funds for starting a business or expanding the business. People avail business loans by pledging property with financial institutions. The loan amount and approval depend upon the property’s value, known as the loan-to-value ratio used by banks, loan distributors, NBFCs.

There are specific criteria that need to fulfill to get a loan against property in India. Let’s delve deeper into required documents, eligibility, tenure, etc., in the following paragraphs.

Eligibility for LAP Loan

Business owners have to fulfill a couple of conditions in order to be eligible for a loan on the property in India.

  • Two to five years of business existence
  • Must be a resident citizen of India with a company registered with an Indian address.
  • Company documents and financial statements must be transparent about transactions over the previous two years. Audit of the financials of the business by a certified Chartered Accountant is mandatory.
  • KYC documents and Company Pan card.
  • Income and expenditure statement of last six months from your bank
  • Documents related to the property requires, which are going to be as collateral with the financial institute.
  • Tax returns proof of last three years.

How to avail of a business loan against property depends upon your fulfillment of the conditions mentioned above. Financial institutions assess loan amounts based on loan repayment capacity. They decide loan repayment capacity according to annual income, liability, area of operation, CIBIL score, personal profile including education or previous job, and many more.

If a business person wants to know how much loan their business can get, they can check their eligibility and amount on one of the loan calculator software available online.

Documents for a business loan on the property

  • After checking eligibility and loan amount on calculator software, let’s go through the documents requires for applying for the business loan on the property in India.
  • Government sanctioned identity proof. It could be any one out of PAN card, Aadhar Card, Voter ID, Driving License, and Passport.
  • Permanent and correspondence address proof. Options are ration card, electricity bill or cooking gas bill with name on the top, bank passbook, driving license.
  • Age proof documents. Birth certificate, Passport, PAN card, Aadhar card, and any document sanctioned by the Government will work as age proof.
  • Bank statement of last six months and form 15
  • Valid property documents without any legal glitches

Who provides LAP loans in India?

Loans on the property for a business can be availed through all the leading banks, NBFCs, and leading loan distributors such as Apna Paisa.

LAP loans across major banks

If you are taking a business loan against property, you should consider minimum and maximum loan amount, processing fees, tenure, etc. For example, lending banks and financial bodies charge between 0.5 and 2 percent of the property value as a processing fee.

There is a limit on the maximum amount a bank can charge. Example: Bank of Baroda charges a maximum range of processing fees at 1.5 lakh, State bank of India and Canara Bank charges Rs. 50000.

Bank of Maharashtra, Kaur Vysya Bank sanctions up to 3 crores whereas Union Bank India, Canara Bank, and Bank of Baroda can provide business loans against property in India maximum up to ten crores.

Tenure and other benefits

Banks and financial institutes offer maximum tenure in the range of fifteen to twenty years. Business loan on the property is easy to get with several other benefits.

Business loans against property can save on taxes and use the available resources most efficiently. Avail loan on the property to get tax benefits, lower interest, lower EMI, and prosperous business.

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