How does loan against property work for small and medium businesses?

How does loan against property work for small and medium businesses?

By admin | November 30, 2020

No one can ever tell when and how there will come a time when your business will face an urgency of funds to overcome any financial challenge. Times like these are uninvited guests who can disrupt your business financial planning. Hence, it is crucial to align financial aid options beforehand to tackle any business emergency. In this article, we will talk about Loan against Property (LAP) and walk you through how you can avail loan against property from EFL.

What is Loan against Property?

Loan against property is a type of secured loan, which you can avail to fulfil your business requirements by extending your commercial or industrial property as security with any financial institution. You can avail this financing option against any commercial or industrial property you own and use the funds to meet your business requirements.

How is loan against property useful to fulfil business growth?

You can use the amount received against a property for any end-use related to your business. Here are some areas where funds acquired from a loan against property could be useful:

  • Meeting working capital needs 
  • Expanding your business 
  • Paying employees’ salary 
  • Paying vendors’ bills 
  • Purchasing raw material 
  • Purchasing a new industrial property 

When should you consider availing a Loan against Property?

  1. Clear ownership of a property  

The first and foremost thing is to be sure that the property you own is undisputed while planning to apply for a loan. If in case the property to be mortgaged is disputed or under the process of resolving the dispute, there are high chances that your loan application will not be accepted.   

  1. Appropriately valued property 

It is of utmost importance to check the market value of your property before you apply for a loan against property. This step is crucial as the sanctioned amount cannot surpass the property’s market value. However, you can avail up to 70% of the property value as a loan. If your fund requirement is more than the property value, you should consider other financing options to fulfill your requirement. You may be eligible for a lower loan amount in this case. 

  1. No intentions to disturb savings 

You can opt for a loan against a commercial or industrial property when you do not intend to use your savings amount. If you have a property with clear ownership and can offer the fund that you require, a loan against the property is a good financing option.  

What documentation is required to avail Loan against Property?

You are required to present a document of ownership of the property along with other documents like identity and address proofs and bank account statements. You may also need to submit additional documents during loan processing. While taking a loan against property from EFL, you are required to submit the following documents: 

  • KYC- Aadhar card and PAN card 
  • Proof of commercial and residential ownership 
  • 12 months bank statements of all banks 
  • GST returns for the current year 
  • Three years balance sheet and ITR  

What are the eligibility criteria for Loan against Property?

If you are planning to take a loan against property, you should be well aware of its eligibility criteria. In case you are considering EFL, here are a few things you should note:  

  • You can avail of EFL loan against a property if your credit score is 600 and above 
  • Your business vintage should be more than 3 years  
  • Your business turnover should be more than 1 Cr.  

These parameters can help in improving the chances of getting a loan from EFL, but it is not mandatory.

If you are concerned about your loan eligibility, we have a quick solution for you. EFL’s loan eligibility calculator is a hassle-free way to check your loan eligibility. You are only required to feed your business vintage, turnover, and average bank balance, and you’ll know how much you can avail. 

Electronica Finance Limited (EFL) is one of the country’s leading NBFCs offering loans against property (industrial/commercial) with customized interest rates. Loan against property offered by EFL comes with quick approvals, easy documentation, and flexible repayment options.  

EFL offers you a loan against the property at a 70% LTV ratio and amount up to 1 Cr. The interest rate for EFL’s loan against property is customized as per the customer’s profile. Additionally, you can avail flexible repayment options for a maximum of 84 months, which you can pay in EMIs without any financial stress.  

Applying for a loan against property from EFL is easy. Click on this link , fill the form with the required details, and our representatives will get in touch with you.  

For more information, you can visit our website . You can also call, SMS, or email to connect with us. Our contact details are provided on our website. 

Electronica Finance
Electronica Finance

We at Electronica Finance are on a mission to simplify the Finance for MSME businesses & to be a Globally Trusted Financial Partner for MSMEs, with a DNA of 'Customer First Approach'.

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