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Why Taking Loan Against Property For Your Business Is Beneficial?

Opting for a loan against property for a business start-up is a good choice since these credits offer a larger sum and comes with a lower rate of interest because of the lesser associated risk. A majority of lending institutions and NBFCs in India allow borrowers to borrow funds for their start-up businesses by mortgaging their property.

Benefits Of Availing A Loan Against Property

There are several benefits of availing a loan against property that makes it an ideal financial product to use for a start-up business –

# High-Value Loans

Starting a business from scratch requires substantial funds. You will need a large sum of money to purchase your office equipment along with other basic amenities.

Henceforth, if you opt for this scheme with your loan against property documents required, you can borrow a large fund at comparatively lower rates of interest. Since you are availing this loan for your business start-up, you can borrow a loan amount up to Rs. 3.5 Crore.

# Avail Tax Exemptions

Section 37(1) of the Income Tax Act allows tax exemptions if a loan against property is utilized for business purposes. In such a case, you will have to submit your loan against property documents to claim benefits against the paid interest and associated fees.

Drawbacks Of Availing A Loan Against Property

# Repayment Issue

If you are not getting a proper income from your business, there are chances that you will fail to pay your EMIs in time.

# Loss Of Your Property

If you are declared bankrupt, then you will lose your mortgaged property. And thus, the lender will take your property to compensate for the amount you borrowed during the tenor period.

Before zeroing in for a loan against property for a start-up business, consider the above mentioned facts. Although the benefits outweigh the drawbacks, it is better to consider all possible situations before applying for a credit.

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