loan against property

Loan Against Property: Should you go for LAP to start your business?

Whether you are looking to expand your business or planning a family vacation abroad, you will never feel cash-deficit if you take a loan against your property.

Commencing a business requires meticulous planning, tremendous efforts and most importantly, finances. As most of the efforts of the company are tied to funds, startups and new firms must understand the importance of external funding. When it comes to external funding, there are a plethora of options provided by both banks and NBFCs. Unsecured loan types like personal loan, credit card loans and secured loan types like LAPs serve as an excellent deal for empowering small business owners. In the following section, we would understand how a secured loan type like LAP provides more significant benefits to the startup community so that they can achieve their objectives efficiently.

What is LAP:

LAP or Loan Against Property is one of the best loan types that a business owner can leverage for kick-starting their business operations without any dependencies. LAP is called a secured loan because it involves pledging of collateral to receive funds from the lending institution, and hence the lender has greater confidence with the transaction. A Loan Against Property varies from an unsecured loan, i.e. due to the following factors:

  • The interest rates for LAP are lower than that of personal loan.
  • The lenders provide longer tenures for LAP compared to personal loans.
  • Banks and NBFCs can provide upto 50% to 70% of the property value as loans, and hence the loan amount can be more than a personal loan.

How to use LAP for your business needs?

Let's admit it. The expenses for a business can exceed the projections, and the working capital can also make the business owner lookout for extra funds to run the business. While there are multiple options for an entrepreneur to claim funds externally, not all financial options can cater to the requirements of the startup owner. If you are a business owner who needs a high loan amount, unsecured loans like personal loans might not help as the loan amount might be lesser than what you would expect to run the business. Hence a loan against property ticks all the boxes as the loan amount can be as per the property value pledged by the borrower which can go in crores as well. Additionally, the lower interest rate and flexibility in tenure can serve as a more significant benefit for the business owners as well.

How to be eligible for a loan against property?

As mentioned before, a business owner can get 50% to 70% of property value as a loan, and the loan against property eligibility is determined on factors like value of the property, placement of the property, repayment capabilities of the borrower, i.e. credit score, income source of the borrower and so on. Additionally, a convincing business proposal is all you need to get the loans processed faster. You can discuss with your lender on how to make yourself eligible for such types of loans.


The loan against property comes with two variants - term loans and overdraft, and you can leverage such loans as per your requirements and grow your business exponentially.



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