Secured Business Loan

Secured Business Loan is a type of funding that is offered against personal guarantee or by pledging assets as collateral. Unlike unsecured business loans , secured loans require security to be deposited to acquire funds from financial institutions like banks and NBFCs. Assets like property, land and equipment are to be provided as collateral in case of default by any borrower.

Customers assure lenders that the borrowed money shall be returned on time, in form of EMIs and if not able to return the loan amount, then lender has the full authority to take the deposited security or items kept as collateral from the borrower. Interest rate offered by secured business loan is lower and affordable, as compared to unsecured loans. Even the repayment tenure offered by lender is longer, as collateral is pledged with the lender.

Also Know: What is the eligibility criteria for MUDRA loans

Usage: Secured business loans can be availed for various purposes, such as for business expansion, buying plant and machinery, buying office space or land, paying off rent or salaries, purchasing raw materials, buying stock, inventory enhancement, debt consolidation, hiring or training staff, etc.

Loan Amount: Minimum loan amount is Rs. 10 lakh and maximum loan amount can exceed up to Rs. 20 crore, even higher depending on the business requirements and borrower’s repayment capacity

Interest Rate: Lower, as compared to unsecured business loan

Loan Tenure: Higher, as compared to unsecured business loan (Max. 15 years)

Security: Collateral security in form of land, such as residential or commercial properties

Financial Documents:

Note: Additional documents may be required at time of loan processing or credit assessment.

Secured business loan against property is a type of funding in which a borrower gets funds by pledging his/her residential or commercial property as a collateral or security with the bank. Funds are disbursed depending upon the Loan-to-Value (LTV) Ratio, as decided by the bank or lender. The maximum LTV ratio can be up to 90% of the property value, depending upon the sole discretion of the lender. To avail business loans against property, applicants can apply for it with private or public sector banks or even Non-Banking Financial Companies (NBFCs) offering this service. In this type of secured loan, the borrower’s pledged property becomes a collateral, submitted with the lender or bank.