5 Reasons to Use Loan Against Property To Grow Your Business

Running a successful business requires adequate cash flow – not just to sustain daily operations but also to achieve growth and expansion. Whether you are looking to scale your operations, purchase new machinery, hire skilled staff, or manage working capital needs, having access to timely funds can make all the difference.

In such scenarios, a Loan Against Property (LAP) can be an effective financing option. It allows business owners to leverage their property as collateral to secure substantial funds at competitive interest rates.

Let’s discuss 5 key reasons why a Loan Against Property for business growth can be a smart choice for you.

5 Reasons to Opt for a Loan Against Property for Business Expansion

There are several benefits of a Loan Against Property for business, making it a popular choice among entrepreneurs looking to scale operations, invest in assets, or meet financial needs.

1. High Loan Amounts

With a Loan Against Property, you can access substantial funds of up to INR 5 crores* or up to 70%* of your property's market value. This significant funding can help you address large-scale business needs, such as launching a new product or entering new markets.

With a higher loan amount, you can achieve ambitious growth plans without having to dip into your savings or disrupt cash flow.

2. Competitive Interest Rates

Being a secured loan for business using property, LAP allows you to pledge your property as collateral. The secured nature of the loan reduces the lender's risk, leading to competitive interest rates compared to unsecured loans. Lower interest rates can reduce your monthly repayment burden and the overall loan cost, leaving you with more funds to support your business growth.

3. Flexible Usage

One of the standout features of a Loan Against Property is its versatility. The funds can address multiple business requirements without restrictions. For example, you can use a Loan Against Property for working capital needs, acquiring new inventory, upgrading your infrastructure, and so on.

4. Longer Loan Tenures

Loan Against Property often comes with repayment tenures of up to 15 years, allowing you to structure the repayment schedule according to your cash flow. Longer tenures mean smaller EMIs, reducing the immediate financial pressure on your business.

The flexibility in repayment helps you focus on critical growth initiatives while managing repayments more comfortably. However, it's essential to note that longer loan tenures may increase the overall interest costs over the life of your loan.

5. Hassle-Free Application

Getting a Loan Against Property is a typically simple and straightforward process. Many lenders offer convenient online application portals requiring minimal documentation. With quick approvals and disbursals (subject to eligibility and lender policies), you can secure funds in a timely manner and focus on achieving your business goals.

Eligibility for Loan Against Property for Business

Let’s look at the general eligibility requirements for self-employed individuals or SMEs:

For Self-Employed Individuals:

• You must be an Indian resident and citizen.
• Your age should be at least 25 years when applying for the loan and should not exceed 65 years by the end of the loan tenure.
• You must demonstrate a stable and consistent source of income.
• You need to maintain a minimum CIBIL score of 700.

For Small and Medium Enterprises (SMEs):

• The SME must be of Indian origin and operational for at least 2 years.
• Financials should indicate consistent profitability over the last 2 years, with records verified and audited by a chartered accountant.

**Given above are the basic eligibility criteria. The final eligibility will depend on several other parameters including the lender’s policy at the time of loan application.

How to Apply for a Loan Against Property?

Here are the general steps you can expect to follow when applying for a Loan Against Property:

1. Visit the lender’s official website to start your loan application.
2. Specify your employment type and validate your contact information for further communication.
3. Fill in the necessary details and submit the form along with the supporting documents.
4. You’ll typically get an update on the loan approval status shortly. A lender representative may contact you as your application and property details undergo verification checks.
5. Once all the details are successfully verified, the loan will be sanctioned.
6. After signing the loan agreement, the approved loan amount will be disbursed to your account.

Conclusion

A Loan Against Property can be a strategic financial move to expand your business. By carefully evaluating your business needs, financial situation, and repayment capacity, you can make an informed decision about whether LAP is right for you.

At SMFG India Credit, you can access a business Loan Against Property of up to 70%* of your property’s market value at extremely competitive interest rates. You can use our LAP EMI calculator to estimate your monthly payments and plan your finances effectively. Apply online today or visit your nearest branch for personalised assistance.