Commercial Property Loan

A loan against commercial property is a popular financial option for individuals and businesses looking to unlock the value of their property without selling it. Opt for this type of loan as it allows them to access funds at lower interest rates, while retaining ownership of their assets. 

The flexibility in loan usage, longer repayment tenures, and the ability to secure high loan amounts make it a great choice for various purposes. These include business expansion, debt consolidation, or managing large personal expenses.

It is a type of loan against property with which you can get a substantial amount of funds by mortgaging commercial real estate you own. You can use this property for your business or any other income-generating activity. Lenders often offer this loan when you need significant capital

For example, to expand your business, you are buying something expensive. 

In most cases, a commercial property loan means borrowing against an existing commercial asset. However, some lenders also use the term to describe loans granted for purchasing new commercial properties, such as shops or office spaces.

Various financial institutions offer this loan at varying interest rates. Here is the list of the commercial property loan interest rates offered by multiple lending institutions on Bajaj Markets:

*Disclaimer: The mentioned details are subject to change at the lender’s discretion.

To get a commercial property loan, you need to fulfil some basic eligibility criteria. Here is a table highlighting some common criteria that a majority of lenders may require you to fulfil:

Salaried Applicants

• You should be an Indian citizen

• Your age must be between 23 and 70 years

• You should have a minimum work experience of 3 years

• You must be employed by a public company, private firm, or MNC

• Ideally, you must have a CIBIL score of 750 or more

Self-employed Applicants

• You must be an Indian citizen

• Your age must be between 23 and 70 years

• Your current business should have a vintage of at least 3 years

• Ideally, you should have a CIBIL score of 750 or more

*Disclaimer: The eligibility criteria may differ from one lender to another. The details mentioned above are for informational purposes only.

Provided below is a list of documents that are usually required to apply for a commercial property loan:

• Proof of Identity

  • PAN card

  • Aadhaar card

  • Passport

  • Voter ID

  • Driving licence

• Proof of Address

  • Aadhaar card

  • Voter ID

  • Passport

  • Ration card

  • Utility bills

• Property Documents: Title documents and other paperwork related to mortgage and ownership

• Proof of Employment

  • For Salaried Individuals - Employer-issued identity card

  • For Self-employed Individuals - Business registration certificate, partnership agreement, and so on

• Proof of Income

  • For Salaried Individuals - Last year’s ITR, salary slips of the last 2 months, and bank account statements of the last 3 months

  • For Self-employed individuals - ITR of the last 2 years, balance sheet, P&L statement, and bank account statements of the last 6 month

• PAN details or Form 60

Follow these simple steps to apply for a commercial property loan on Bajaj Markets:

1. Click on the ‘CHECK OFFER’ option on this page

2. Provide your personal and property-related details

3. Choose the lender from the list provided

4. Enter the required loan amount and tenure

5. Check the details entered and submit the application

Following this, a representative of the loan provider will reach out to you for further proceedings.

Before you apply for the loan, it is important to plan carefully and meet the necessary requirements. Consider the following tips to ensure a successful borrowing process:

• Clearly identify the purpose of the loan and how it aligns with your business objectives

• Apply only for the amount you genuinely require in order to avoid incurring unnecessary debt

• Review the lender’s eligibility criteria, including income levels, business track record, and the type of property offered as security

• Ensure your credit score is 750 or higher, as this significantly influences the likelihood of approval

• Prepare and organise all required documentation in advance to facilitate a smooth application process

• Refrain from applying with multiple lenders simultaneously, as this can lead to multiple hard credit enquiries and reduce your credit score

Commercial property loans vary based on their purpose and structure:

Traditional Commercial Mortgages

• Banks and financial institutions offer these standard loans

• They usually have terms of 10 to 20 years

• Lenders require collateral, often the property itself

SBA 7(a) Loans

• The Small Business Administration (SBA) backs these loans

• They suit new businesses and startups

• Favourable terms make them an attractive option

SBA 504 Loans

• The SBA also backs these loans.

• They help finance fixed asset purchases like real estate or large equipment

• Borrowers benefit from low rates and long terms

Bridge Loans

• Lenders offer these short-term loans to cover immediate funding needs

• They help bridge the gap until permanent financing becomes available

Hard Money Loans

• Private lenders typically offer these high-interest, short-term loans

• They secure the loan against the property's value, not your credit score

It offers flexible financing options to support both personal and professional goals. Here are some common use cases:

• Education Funding

Use the loan to finance higher education expenses. This can be your tuition, books, and accommodation.

• Medical Expense Coverage

Access quick funds to handle unexpected medical treatments or emergency healthcare needs.

• Home Improvement

Upgrade or renovate your home to enhance comfort, functionality, or property value.

• Debt Consolidation

Combine multiple high-interest debts into a single, more affordable loan.

• Business Expansion

Invest in your business. It can be buying equipment or opening a new branch.

If you wish to opt for a property loan in India, here are essential aspects that you must consider before applying:

• Collateral

If you choose to opt for a property loan, you must first find out the type of commercial property you can mortgage. You can get a loan against commercial property like a grocery shop, office building, manufacturing shop, and so on.

• Builder Records

If you are applying for a property loan against a project that is still under construction, run a background check on the builder. 

Also, ensure that the builder has already secured all the requisite approvals for the construction. If there are any discrepancies in the builder’s records, your loan may be rejected.

• Loan Amount

The amount of loan that you can get with a property loan depends on the market value of the property. This is called the Loan-to-Value (LTV) ratio. The LTV ratio of commercial property loans is generally lower than that of loans against residential property.

• Repayment

Commercial property loans have a longer tenure in comparison to other loans. It can range up to 20 years, enabling you to repay the loan at a more gradual pace and resulting in a lower strain on your finances. 

To plan your finances better, you can use a Loan Against Property Calculator and compute the EMIs you are likely to pay.

Lenders disburse the loan only after completing the technical appraisal and verifying all legal documents. Here's how disbursement typically works:

• Resale Property Purchase

Lenders release the full loan amount to the seller after confirming that the borrower has paid their share.

• Under-Construction Commercial Property

Lenders typically disburse the loan in multiple stages, with each instalment released according to the progress of the construction project.

• Purchase Through Builder or Authority

Borrowers need to first invest their share. Lenders then disburse the loan in lump sum or instalments, as required by the builder, society, or development authority.