What Is A Loan Against Shop? Here Are The Complete Details

In FY 2019, India’s credit growth touched a new high with a 9.8% increase since the previous year. The lending industry is at its peak with mortgages and home loans doubling since the fiscal year 2017. At around Rs. 11.2 trillion, the mortgage market in the country now constitutes about 12% of the size of the Indian economy.

Considering this rapid growth pace, leading financial institutions and NBFCs have joined the bandwagon in providing loan against assets to potential borrowers. One such credit facility is a loan against shop. It is generally a type of mortgage loan which offers a large amount of capital which needed to covers your heavy expenses. One can use this for renovating the shop, extening, renting new shops and much more.

What Is This Loan Facility All About?

A commercial mortgage is an advance secured on a commercial space instead of a residence. This specialized high-value loan is offered by all leading lenders in the country to cover all of your sizable expenditure.

Usually, you can avail loans up to 70-75% of your current mortgage value. A commercial mortgage –

  1. Has no fixed rate of interest as the price of the commercial property fluctuates with the current market value.
  2. The rate of interest on loan against commercial shop is always competitive as compared to home mortgages as they pose higher risks to lenders.
  3. Commercial mortgages usually offer a better rate of interest than a regular unsecured loan as this credit facility required you to pledge a business property as collateral.

In case you default on a payment, a lender always has the option to liquidate your asset to recover the outstanding dues.

The Benefits Associated With A Loan Against Shop

Here are some reasons why can consider availing a Loan against Property for Shop from lenders like Bajaj Finserv –

  • Flexi Loan facility.
  • Online account management.
  • Easy-to-avail balance transfer facility

Furthermore, a loan against goods in the shop comes with no end-usage restriction. Hence, you can use the substantial sum of up to Rs. 3.5 Crore to fund a variety of big-ticket expenses such as –

  • Invest in a new commercial property for business expansion
  • Restock your depleting inventory
  • Bear the cost of a medical emergency, etc.

Availing a loan against commercial shop from lenders such as Bajaj Finserv offers quick approval of the credit amount with minimal paperwork and fast disbursal of the sum within 3-4 days. Besides, you enjoy an extended repayment tenure for up to 18 years, unlike most lenders. Here is how you can apply for a loan against property and reap its numerous benefits.

They also bring you pre-approved offers that make procuring loans quick and hassle-free. These pre-approved offers are applicable on unsecured credits like personal loans, business loans and secured advances such as home loans among numerous other financial products.

Points To Consider Before Opting For A Loan Against Shop

Since commercial mortgages require one to pledge his/her asset, it is advisable to keep a few pointers in mind before applying for one.

  1. Even if you possess comparatively lower CIBIL score, you can still obtain this credit facility with a relatively higher interest rate.
  2. As this is a secured advance, so if you default, you will lose ownership of your commercial property.
  3. Hire a broker to assist you in finding the highest LTV (loan to value) ratio.
  4. You must have at least 3 years of business vintage as proof of repayment ability.

Lastly, your business’s projected income must be sufficient as it determines if you are capable to cover the cost of loan against a commercial shop. Plus, you must be aware of the documents required to apply for a loan against property.

The documents are –

  • The current along with projected performance figures
  • Income tax returns
  • Profit and loss balance sheet audited by a CA
  • Copy of documents of the mortgaged commercial property
  • Address proof
  • Bank account statements
  • PAN or Aadhaar card

Obtaining the best loan against shop will be a quick and hassle-free experience if you keep these details in mind. To avail the loan against shop easily you must have to meet the loan against property eligibility criteria. But in case if you want to start your own business you may apply for the start up loan on property for large capital funding. Various financial institutions and banks provide these types of loans.

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