Starting a business is no simple task. You need to make detailed business plans, hire efficient employees, arrange for raw materials and production equipment and then establish your business from the ground up. Considerable money is required to start a business and your funds might not prove enough. Loans are, therefore, available to fund for your start-up expenses. A loan against property or LAP Loan is one such loan which you can avail for meeting the expenses incurred in starting your business. Let’s understand the loan in details and why it proves to be a good choice –
What is a loan against property?
A loan against property is a loan which is issued against the value of a property which is mortgaged to the lender. If you own a property in your name, you can mortgage it to get a loan against its value. Loan against property is a type of personal loan which can be used for any financial obligation.
Benefits of the loan for starting a business
Here are the benefits of how loan against property helps start your business –
A considerable amount of loan
The loan is granted against the value of the property that you mortgage. Since your property has considerable value, you can get considerable funds. The loan offers up to 70% of the value of your property as loan. Since you require sufficient funds when starting a business, the loan is apt to provide you the required funds.
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Affordable rates of interest
A loan against property is a secured loan as it is secured against the mortgage of your property. Being a secured loan, lenders do not face a high risk of default. As such, the interest rates are kept low and affordable. As you start a business you cannot afford to pay very high interest charges towards any loan. A loan against property, therefore, gives you funds at rates which your business can afford.
As stated earlier, a loan against property is a type of personal loan. As such, the loan can be put to various uses. You can use the loan to hire employees, for buying equipment and machinery, for paying the lease on your office, for buying raw materials and also for meeting the day-to-day working expenses of your business. There would be no restrictions on the usage of the loan and you can use the amount freely for any business expense.
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There is no shortage of lenders who offer loan against property. You can find the loan easily and also apply for it online. Online loan applications are also approved quickly once the property has been valued by the lender and you submit your documents.
Given these benefits, a loan against property is a suitable loan for starting your business. Though there are business loans specifically meant for that purpose, a loan against property proves to be a better match. Business loans do not allow such a high quantum of loan, have a higher interest rate and are granted to established businesses. Since you are starting a new business, the loan might not be available. So, avail a loan against property and start your business easily.