Loan against property: a practical guide for business owners

A loan against property (LAP) lets you raise a large amount at secured-loan rates by mortgaging a property you own. Business owners use it for expansion, working capital or to replace expensive unsecured debt.

How much can you get?

Lenders typically fund 60–80% of the market value. Residential property gets the highest percentage; commercial and industrial property slightly less. Your income still decides the final amount, because the EMI has to fit your cash flow.

What lenders check

• A clear title and complete chain of ownership documents
• Approved building plan and the property's physical condition
• Income: ITR, GST returns and 12 months of banking for self-employed applicants
• Your CIBIL score and existing loans

Keeping the rate low

Show all your income in ITR, keep bank balances healthy, and choose a residential property as security if you have the option. Adding an earning co-applicant can also help.

Term loan or overdraft?

If you need money in parts, an overdraft-style LAP lets you pay interest only on what you use. For a one-time need, a term loan with a fixed EMI is simpler.