Ethically, small businesses would like to go for loans to fund their startups or grow their business. This practice has been done for a very long time that it has become more like a tradition. Small businesses should realize that it is not always going to look outward for a source of funding without first looking inwards and this post will tell you how.
Loan against property lending is witnessing a steady growth
Loan against property lending for businesses has witnessed an unprecedented growth which has been sustained from 2015 to the present year according to a credit rating agency. The property that is used for the loan can be residential or commercial. This loan is becoming the option that is gaining acceptance to finance small businesses.
Startups without an impressive profit and loss sheet can leverage on loan against property
Profit and loss records, as well as credit score, are one of the first requirements that commercial banks would ask when you go there seeking for a loan. What about startups who do not have these documents or those who have a laughable form of these documents? With business loan property, they still stand a good chance of getting a loan.
Mortgaging reduces the risk of lending institutions
Lending is a risk as you can never guarantee that the borrower will be a good behavior and pay back the due when time matures. To reduce this risk, banks and other financial lending institutions make use of mortgage which provides some form of security for them. Banks will easily part with mortgage loans to businesses (small or big) at a fair interest because of the backed security that comes with this type of loans.
Mortgage loans are usually backed by collateral
Those seeking for mortgage loans should have it at the back of their mind that these loans would require collateral. However, these loans have some advantages over the traditional corporate finance. The major advantage here is that the tenure of the loan will appreciate while the interest rate depreciates. The amount of loan that can be applied for almost triples.
There are numerous mortgage loans available
Mortgage loans can be used to fill various vacuums in a business. If you have the requisite property that you can use to back up a loan, you should give the following mortgage loans a deep consideration as follows:
1. Lease rental discount
Commercial or residential property owners can procure these loans if they have receivable rents that are fixed. Here, a transfer from top-up facilities as well as other banks may be available.
2. Loan against property
Here, the owner of a residential or commercial building tends to get liquidity. It has a long repayment time of sometimes fifteen years which gives the borrower window to plan for repayment.
3. Commercial property purchase
This type of funding is most suitable for firms aiming for expansion either in terms of office expansion or infrastructure expansion. The property to be purchased will act as the collateral.
Mortgage bank can favor the borrower in a way
There are some loans backed by collateral where the owner of the property will retain right over the property. This is not the case with an equitable mortgage because the deed of ownership will be held onto by the lending institution till the borrower has cleared their bills to the last. Loans eligibility calculator takes various criteria (property value, monthly profit, tenure and so on) into account to determine if you qualify for a loan.
- Small businesses are always desirous of loans notwithstanding that they are classified as high risk.
- Loan against property has witnessed unparalleled growth.
- Startups usually lack some of the documents required for a loan.
- Mortgaging provides some form of security to lending institutions.
- Mortgage loans usually require collateral.
- Lease rental discount is available for the residential or commercial property.
- Loan against property has a long repayment plan which can be up to 15 years.
- Firms seeking for expansion should go for commercial property purchase.
- The owner of the property retains the right to it in some loans.
- Deed of ownership is held onto in mortgage loan till the person pays his or her debt.
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