A lot of business loans are financed against the security of a property. If you do not own any property, you can still get a quick business loan on the security of any other financial movable asset like a bank’s fixed deposit, National Saving Certificates, Shares of approved listed companies, units of mutual funds scheme and insurance policies with good surrender value. Regardless, majority of the business loans are financed against security of an immovable property. Lenders are often more keen on lending against residential and commercial properties. Lenders usually hesitate in loaning against any plot of land due to encroachment issues of such plots.
Reason behind opting for Business loans
NBFC and banks, both provide quick business loans against property in India. Banks charge a relatively lower interest than that of the NBFC. Working capital needs of the business is the reason behind business loans against property. In some of the cases, the immovable property is secured and provided as a security for the term loans taken for the purpose of capital expenditures like the construction of a factory building or purchase of plant and machinery. In loans against property, the borrower deposits the original title documents with the lender without involving too much documentation.
How business loans against property work?
For loans against property, the lender gets the valuation of the property done to arrive at the valuation figure of the property. In most cases, the lender will lend you around 50% of the value of the property. The lender will always evaluate your ability to service the business loan while deciding on the loan amount eligibility. The eligibility to get these business loans is constrained by your income. Lenders normally grant loans equal to your two years income, subject to a margin of 50% of the value of the property. While granting these loans, it is necessary to provide a certain document, so as to comply with the ‘Know Your Customer’ norms. The address proof, proof of your income in the form of copy of return of income is included in this process. The form no 16 will be sufficient in the case of salaried employees.
What FinZcart does
FinZcart gives you a comparison of the best possible loans and also provides you with an EMI calculator with which you can calculate the amount of interest that you’d have to pay against loans every month. With this calculator, you don’t have to bother about the rate of interest and you can manage your resources to fit in your budget efficiently.