Business loans have long served as a lifeline for small businesses. Micro Small and Medium Enterprises (MSMEs) in particular stand to benefit significantly from them, as it lends them liquidity and financing to tackle day-to-day expenses, as well as commit to long-term growth plans. Traditionally, loans have been provided against some form of collateral to secure it. In other words, lenders require borrowers to submit an asset, which could be liquidated to make up for the loan in case the latter defaulted. This trend has remained unchanged over the years, even as banking evolved, with traditional lenders like banks still asking for collateral against loans.
While this can be difficult for some businesses to manage, particularly MSMEs, as many of them don’t have access to collateral they can leverage to get a business loan against property, it can also be beneficial. For businesses that can afford to provide collateral, a loan against property can ensure easy access to substantial loan amounts, accelerating their growth. Let’s understand what is a loan against property and how MSMEs can leverage it.
A Loan Against Property (LAP) is a secured loan where the borrower leverages a commercial or residential property as collateral to obtain funds. The property documents are submitted at the time of loan application, and remain in the possession of the lender till the loan is paid off. In the interim, the borrower is not permitted to sell or transfer ownership of the property in any way. If the borrower defaults on the loan, the lender might move to liquidate the asset in order to recoup the loan amount. The loan amount is typically a percentage of the property’s market value. LAPs offer borrowers the advantage of securing large sums of money at relatively lower interest rates compared to unsecured loans, with the property serving as a guarantee for repayment.
With LAP, you can get an instant loan against property, which can be a major advantage for an MSME business. NBFC loan against property adds an extra level of ease and convenience, as the applications are processed quickly and loan disbursement is seamless. RBI-registered NBFCs are a trusted source of such loans, and borrowers can rest assured that their loan and assets are in safe hands, as the regulator ensures best practices.
A Loan Against Property allows you to unlock the value of your property to fund the growth of your business. Whether you need to purchase raw materials, repair machinery, or expand your product portfolio, Loan against property(LAP) provides a reliable and affordable way to access larger funds with lower interest rates. By securing your loan with your property, you can benefit from a flexible and long-term solution tailored to your business needs. Since these loans are secured, you can expect lower interest rates and longer tenures, making it easier and more manageable to repay them. This also allows you to invest more in your business growth over time, significantly boosting growth potential.
Kinara Capital is an RBI-registered fintech NBFC that offers business loan against property to MSMEs. At Kinara, we understand the unique challenges faced by business owners. Our LAP loan offering is designed to help MSME entrepreneurs tap into higher loan amounts while maintaining financial stability. It’s a great way to diversify your financial options and grow your business at your own pace while getting the best options in terms of tenure and interest rates.
LAP loan interest rates are usually lower and tenures longer, so being eligible for a loan against property could be a major advantage. Make sure to have documents for loan against property in place in order to be eligible. To secure a LAP at Kinara Capital, your business should meet the following criteria:
Before you apply for loan against property, there are a few things that you need to keep in mind. The following will ensure that you are able to properly utilize your loan:
A Loan Against Property can be extremely beneficial for an MSME as it provides quick financing for a variety of business needs. Loan against property is a secured category of loans, which means that they come at lower interest rates and have longer repayment tenures, which eases the repayment burden significantly. This, in turn, means that you can invest more in your business growth. The process of acquiring an NBFC loan against property is further eased by seamless digital processes and doorstep customer service provided by Kinara Capital.
Kinara Capital is an RBI-registered fintech NBFC that offers business loan against property to MSMEs. At Kinara, we understand the unique challenges faced by business owners. Our Loan against property loan offering is designed to help MSME entrepreneurs tap into higher loan amounts while maintaining financial stability. It’s a great way to diversify your financial options and grow your business at your own pace while getting the best options in terms of tenure and interest rates.
At Kinara Capital, we have a fully online process to apply for loan against property. There is a simple 3-step application process, followed by approval and disbursement. If you meet our eligibility criteria for loan against property, your loan could be processed in just 24 hours. Here’s a step-by-step explanation of Kinara’s loan process:
In less than a minute, you can find out if your business qualifies for the loan! You can access the eligibility check in seven different languages available on our website for a seamless experience.
The business and the entrepreneur are screened following Kinara’s MSME loan criteria by validating the KYC and registration details.
You need to submit your KYC, applicant, co-applicant, business KYC (ID and address proof), applicant PAN Card, business registration document, last 12 months’ bank statements, GST registration (if available), and business vintage proof.
Once you complete the process, your loan application will be reviewed, and if everything is in place, the Kinara officers will approve your MSME loan.
Once your loan is approved, you will receive the loan amount directly in your account within 24 hours.
Loan against property is the perfect solution to access financing for MSME entrepreneurs who have property to leverage as collateral at their disposal. It allows them to tap into the value of their property without having to liquidate the same. They can retain ownership of the property even after the loan is disbursed, and can take the paperwork back at loan closure. The lower interest rates and longer tenures that these loans provide make it easy to repay them, while investing in business growth. Kinara Capital serves as a partner in growth for MSMEs, and the company’s new loan against property product is the ideal financing solution to help your business stay on the growth path.
1. What types of properties can be used as collateral?
You can use your self-occupied residential or residential-cum-commercial property. Land isn’t eligible, but if you own a property, we’ll guide you through the process.
2. How can I use the funds from a Loan Against Property?
The funds can be used for business-related needs like purchasing raw materials, scaling up your operations, and repairing machinery.
3. What are the typical eligibility criteria for a Loan Against Property?
You’ll need to own a qualifying property and have a business with a minimum monthly turnover of ₹2 lakh.
4. What are the repayment terms for a Loan Against Property?
Repayment terms are flexible, typically ranging from 36 to 72 months. EMIs are structured to fit your business’s cash flow, with various payment modes available to make it convenient for you.
