2 min read
25 May 2021

Getting a new business venture off the ground can be a daunting task, both financially and otherwise. In terms of mortgage loan eligibility, being a first-time entrepreneur may disqualify you from a range of loans. However, one funding source you can rely on is a loan against property (LAP). This secured business loan requires you to pledge a residential or commercial space you own to get financial assistance. This loan can be used for any purpose you desire and comes with attractive repayment options too. Here are 5 reasons why you should choose an loan against property to start your business.

You can obtain large loan amounts

Today, there are a number of government schemes offering small business loans, minority business loans and even small business loans for women. However, if you need more substantial funding, opt for an loan against property as you get a percentage of the market value of your property as a loan. This amount can run into crores. For example, you can get a mortgage loan amount as high as Rs. 5 crore to fund your business from Bajaj Finserv.

Nominal interest rates

Business loans secured against a property have low interest rates as lenders are more assured about repayment. Thus, whether you need a loan to start a business or a working capital loan to sustain operations, loans against property ensure that your finances are not stretched. However, you need to sift between lenders offerings to get the most economical interest rate.

Choose longer repayment tenure

loans against property are one of the best start-up business loan solutions as they allow you to pay back over long tenors. This often goes to 15 years. You can thus use property-based collateral loans to fund your project quickly and not worry much about EMIs as they can be kept small by stretching the repayment tenor.

Eligibility terms

Getting a loan with a collateral is easy as your eligibility is not solely dependent on your income. Since your project is not yet off the ground, being backed by a collateral can greatly help you obtain a loan successfully. All you need to ensure is that your asset is free from any litigation.

Align your loan to your business needs

The most effective way to fuel your business’ on-going needs is to obtain a Loan Against Property from Bajaj Finserv and avail of the Flexi Hybrid facilities. Flexi Loans allow you to borrow finances from your approved sanction on the go, as per your business’ needs. The benefit is that each time you borrow, you pay interest only on the amount withdrawn and not on the total sanction. Additionally, as your business generates returns, you can use surplus finances to prepay and even foreclose your loan at no extra charges whatsoever. Another factor that sets Flexi Loans apart from other secured business loans is that here you can make interest-only EMI payments for up to the first 4 years of the tenor.

Additional Read: How does your credit score affect Loan Against Property eligibility?

So, what are you waiting for? Jump-start your business venture by bolstering your finances with a loan against property. Check your pre-approved offer from Bajaj Finserv to hasten the loan disbursal. After sharing a few basic details, you will obtain instant approval and access to customised financing solutions.

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Frequently asked questions

What are the advantages of loan against property?

A loan against property offers several advantages, including lower interest rates, higher loan amounts, flexible end-use, extended repayment tenures, quick processing, potential tax benefits, no usage restrictions, financial planning opportunities, improved credit scores through timely repayments, and steady interest rates.

Can I take a business loan against a property?

Yes, you can take a business loan against a property, and this type of loan is commonly known as a Loan Against Property (LAP) for business purposes. In a business loan against property, you pledge a property—usually residential or commercial—as collateral to secure funds for your business needs.

What is the objective of loan against property?

The primary objective of a Loan Against Property (LAP) is to provide individuals or businesses with a financial solution by leveraging the value of their property.

Can we get tax benefits on loans against property?

Tax benefits on loans against property include a deduction of up to Rs. 30,000 per financial year on interest for home improvement/renovation under Section 24(b). If the loan is used for business purposes, the interest paid may be considered a business expense and is deductible from business income. However, there is no specific deduction available for the principal repayment of a loan against property.

Is taking a loan against property safe?

Taking a loan against property can be safe if borrowers carefully consider factors such as the secured nature of the loan, their repayment capacity, the purpose of the loan, interest rates, charges, market conditions, loan amount and tenure, prepayment terms, and the lender's reputation. It is crucial to understand the risks associated with LAP, including the potential loss of pledged property in case of default.

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