India has witnessed a sudden rise in demand for commercial property in recent years. In hindsight, this shouldn’t surprise anyone as India is considered to be the second-fastest-growing economy in the world. That said, it is still painstakingly difficult for small businesses to own commercial property as most budding firms do not possess the necessary funds.

This is where a commercial property loan comes into play. So if you are a small business owner seeking commercial loans in India, then you might want to read right until the very end of this article to learn everything there is to know about securing a loan in India in order to purchase a commercial property.

So without wasting any more time, let’s get started.

What is a Commercial Property Loan?

A commercial property loan is typically taken for the purpose of purchasing or renovating a non-residential property. Simply put, these loans are only meant to accommodate properties that are operated as businesses. These include offices, restaurants, shopping complexes, and other edifices just like them.

What does this loan entail?

Commercial properties can be divided into two segments. First being office spaces and the second, being retail outlets. These properties can be further classified as those that are under construction and those that are ready to move.

Like any other loan, it is mandatory for the borrower to mortgage a reliable property for approval.

Most lenders intend to keep the commercial property as collateral. This gives the lender a sense of security to eventually offer the loan to a borrower without worries.

Who is eligible for a commercial property loan?
  • The following entities are eligible to apply for commercial property loans:
  • Doctors, lawyers, accountants, or any other self-employed professional
  • Traders
  • Commission agents
  • Contractors
  • Self-employed non-professionals
  • People aged between 25 to 70 years old
  • Indian citizen

We recommend approaching reliable loan consultants in India like FinDestination to determine whether you are eligible for the property loan.

Factors Affecting Loan Approval

Aside from the above eligibility criteria, there are other parameters that a lender will consider before approving a commercial property loan. Those factors are listed below:

1. Financial Stability of Business or Individual Borrower

Lenders always seek out borrowers that have a good credit score and enough funds to pay back the borrowed amount in the future. Lenders will demand the following documents to verify your financial stability:

  • Income Tax Returns
  • Financial Statements
  • Business Bank Account Statements

The better your financial status, the higher will be the chance of you securing a loan.

2. Technical Evaluation of Property

It is important to remember that banks and other lenders intend to keep the mortgaged property for themselves if, for some reason, you aren’t able to pay back the loan. For this purpose, the lender will try to evaluate the building to make sure everything is in prime condition. So naturally, you can increase your chances of getting a loan by making sure your building meets all the necessary technical requirements like emergency exits, well-maintained lifts, fire-safety measures, etc.

3. Approvals

Lenders will only give loans against a commercial property that is clean and marketable. As we mentioned before, that property is their primary security. So they will demand the borrower submit all approval documents applicable to the property up till the date of applying for the loan. If a lender finds out that any approval is still pending, then this might jeopardize the whole agreement.

4. Reputation of Builder

Seeking out a loan can be especially challenging for a property that is still under construction, and the loan’s approval will largely depend on the builder’s reputation. So naturally, a building being developed by a renowned builder with a reputation for delivering projects on time stands a higher chance of securing loans than a builder with a poor reputation in the industry.

5. Offering Collateral Security

You can increase your chances of securing a commercial property loan by providing additional collateral security to the lender. This security can be anything from your privately owned property to mortgage-free land. Additional collateral reduces the risk of a lender, thus making them more willing to approve a loan.

Securing a Commercial Property Loan with the Help of FinDestination

Taking out a loan against commercial property is no small task. The approval process can be tedious. So you would be wise to seek advice from reputable loan consultants in India to sail smoothly through the unforgiving waters of commercial property loans. That is exactly what you get when you choose FinDestination as your ally.

Over the years, we’ve helped several business owners and self-employed professionals secure a commercial property loan without a hassle. Rest assured, we can do the same for you.

Contact now to learn more.