Chandigarh, July 18, 2024: For many aspiring entrepreneurs, growing a business is a dream, but financial challenges can often get in the way. Luckily, banks and financial institutions offer various solutions, and one popular option is a loan against property (LAP).
A loan against property is a type of loan where you use your property as collateral. This means you offer your house, flat, or land as security for the loan. The lender holds onto the property as a guarantee until you repay the loan, but you can still live in or use the property during this time.
“A loan against property can be an excellent choice for business growth due to its lower interest rates and high loan amounts. However, it’s crucial to evaluate all your options and choose the one that aligns best with your financial situation and business goals,” says, Jagdeep Mallareddy – Chief Business Officer at Piramal Finance
Using a loan against property for your business has many benefits. First, interest rates are usually low, starting at around 8% per year in India, which makes it easier to pay back the loan. Unlike selling your property, which means you lose ownership forever, a loan against property lets you keep your property while you get the money you need based on its value, your credit history, and your income.
NBFCs can lend up to 65% of your property’s value, sometimes up to INR 5 crore, giving you a lot of financial flexibility. Plus, monthly payments are manageable, usually between INR 750 and 900 per lakh borrowed, and some lenders offer flexible repayment options for your business needs.
A loan against property is a popular choice for funding business growth because it offers various benefits, like tax exemptions on interest paid and related fees under Section 37(1) of the Income Tax Act. However, before you decide, it’s important to compare all available options to find the best fit for your business, and use tools like a loan against property calculator.
In conclusion, a loan against property can be a great option for those who want to grow their business while keeping their property. It’s important to consider all factors and choose the best option for your financial situation and business goals.
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