Launching your start-up may be the most important decision of your life. However, it is not an easy feat to accomplish your dream. There are challenges that you will need to accept and overcome. The very first thing you need is appropriate capital to start your journey of entrepreneurship.
There are several sources with which you can raise capital like personal loans, business loans, gold loans, and loans against property. It is crucial for you, as a borrower, to choose a loan option that best serves your start-up interest. One viable funding source could be a loan against property (LAP).
A loan against property is a secured loan which is also known as a mortgage loan. It requires you to pledge your residential or commercial property to get finances for your business. The loan amount depends on the total value of the property, which is pledged as collateral. You can continue to use the property after getting the loan. It is available for salaried people, self-employed people, and SMEs.
A lap loan serves multiple purposes and comes with an attractive loan against property interest rate and flexible loan repayment tenure. Here are the reasons to understand why a loan against propertys is an ideal solution for your start-up business.
Maximum loan amount
There are several loan schemes by the government and microfinancing institutions to provide small credit facilities to small businesses and women. However, if your business requires a large sum of money, you can opt for a loan against propertys as you can avail the value of your property as a loan. For instance, the higher your mortgage value, the higher the loan amount.
Minimum loan interest rate
As lenders are assured of getting the loan amount if the borrower defaults on payment, the loan against property interest rates are substantially lower than other loans. Whether you need a loan to start a business or working capital to continue business operations, a lap loan could be used for multi-purposes. Some lenders offer interest rates as low as 9%.
Flexible repayment tenure
The best part about a loan against property is that you have flexible loan tenure that doesn’t put the burden on your finances. The repayment tenure often goes from 10 to 20 years. Hence, you can offer your property as collateral and fund your business without worrying about high EMIs.
Simple eligibility terms
Since your property is pledged as collateral, it doesn’t matter whether you are a salaried person or self-employed. That makes the eligibility criteria simple and minimum. Obtaining a loan against propertys is easily achievable. However, you have to ensure that the property is free from litigation.
Is it an ideal financing solution?
It is one of the most secured loans, giving assurance to the lender. As the loan is approved based on property as collateral, the loan amount is usually high with a lower loan against a property interest rate. A lap loan offers the most flexible repayment tenure, taking the burden of high monthly EMIs off your shoulder.
With the submission of complete KYC documents, property ownership, and fulfillment of other legal formalities, the loan amount can be disbursed quickly. In comparison, a LAP is a great option for start-up businesses.