As the name suggests, a Commercial Property Loan is solely used for business purposes. Businesses that have established themselves can now look at the next phase of expansion. It helps entrepreneurs to easily expand their business and set up a new branch in new geographic areas or reach a new target demographic. The commercial shop loan is used to acquire an office/workspace or other property required to grow the business. By meeting certain eligibility criteria, small and medium-scale businesses can also get a commercial shop loan. Applying for a commercial property loan is quick, easy, and hassle-free!
Important points to note while applying for a Commercial Property Loan:
1) As a loan borrower, there are a few things to consider when applying for a commercial property loan, such as the eligibility criteria, provision of documents, documents for proof of address, proof of income, proof of identity, tax returns, etc.
2) Next up is the processing fee. Some lenders or NBFCs charge a certain percentage of the processing fee on the loan amount. However, if you avail of any offers or benefits, your processing fee may get reduced.
3) Now, coming to the most important part, Interest Rate. The rate of interest charged for a commercial property loan is comparatively higher than other property loans. Apart from the interest rate, you might also have to bear charges like the loan application charges, the overall cost of the loan, annual fees, survey fees, etc. Certain NBFCs analyze the market and provide the lowest interest rates on commercial property loans.
4) Another aspect that the lender or investor examines is the builder’s profile and goodwill in the market. If the property is not yet completed and is under construction, then the lenders pay even more attention to the builder’s details. But, it is easier to get a loan for a new commercial property compared to the old properties. It is complicated to avail of a loan for such buildings due to the high risk involved.
5) One more point to take note of is the tenure for the commercial property loan. Usually, the tenure is short compared to the housing or residential loan. The maximum tenure for the repayment of the loan for commercial property is 10 years. Many lenders and NBFCs also provide flexible tenures. You have the option of paying monthly or biweekly for your commercial shop loan.
6) When applying for a commercial shop loan, ask the lender or NBFCs about the balance transfer facility. The balance transfer facility is very lucrative for any entrepreneur. It allows you to reevaluate your high-cost debt, make modifications, and tweak it to fit your needs. This will help you cut down the amount of interest payable and reduce the burden of your loan.
7) Another factor while availing of a commercial property loan is the disbursement of the loan amount. Many renowned NBFCs provide loans up to 70% of the market value of the property. The remaining value is kept aside to cover unanticipated costs like damage, or any other expenses.
The Bottom Line
These factors play a vital role in understanding and applying for a commercial property loan. Research the market, evaluate your options, and pick the loan according to your business needs and goals!