If you’re an entrepreneur, you would know how invaluable the need for capital to run your business is. Even though the revenue is enough to keep the company running, at some point in time, you’ll have to take the big step to expand your business. For that, you’ll need more than just the revenue. No one will give you that kind of money just out of friendship. However, if you own a property(residential or commercial), you can leverage the market value of the property to meet your financial requirements for the next-level growth of your business. Many banks nowadays provide loans against property, which gives you a head-start to expand your business.
Why Loan against property?
High loan amount
Many banks provide loans of up to 90% of the property value. That’s an ample amount of money to grow your business especially if it’s in a prime area.
Lower interest rates
Since a loan against property is a secured loan, banks will happily give you a substantial amount of money with lower interest rates. Which saves you from too much financial stress on paying huge EMIs.
Longer repayment tenure
Again, since it’s a secured loan with a large sum of money, many banks will give you tenure of up to 15 years. This will give you enough time to fully establish the new strategy for business expansion before it starts generating revenue.
Unlike other business loans, a loan against property does not impose any restrictions on how to utilize the fund. An entrepreneur can delegate the funds for expanding the business any way he finds apt or can be used in even consolidating the debts.
Full ownership remained
Unlike other equity financing options, a loan against property does not cause you to relinquish your control over the company and its operations. Your authority remains the same and the lenders won’t have any say in your company’s management or decision-making processes.
How can you leverage a loan against property for your business growth?
In order to expand your business, you may need to buy a new property to install a new branch or to expand the existing property.
Renovation or new infrastructure
You can invest in renovation or new infrastructure to accommodate or aid your company’s growth.
To stay ahead in the market, it’s essential to integrate technologies and be up to date with them. You can utilize the funds to integrate new technologies into your business.
Hiring & Training
The market is ever-evolving. And you and your employees will have something new to learn every day. To expand the business, investing in the skill enhancement of the employees and yourself is just as important. It will also give you a window to invest in hiring more employees and training them.
There is an unlimited scope for expansion when you have a large amount of capital in your bank. Opting for a property mortgage loan can be a great option to have that. The eligibility for a loan against property may vary depending on the lender. Established banks like Karnataka Bank offer different kinds of mortgage loans for business or personal needs according to your eligibility and requirements. However, before choosing any mortgage loan, it is essential to assess the financial position of your business and the possible risk factors so that you can have a proper risk mitigation plan and keep the business afloat.