Deciding to leave your high-paying job that promises you a stable income to venture out on your own and create something new is a commendable thing.
If you are an entrepreneur, give a pat on your back for having the courage to create your dream from scratch. Of course, there are going to be roadblocks, ahead but where there is will, there is a way. For every start-up entrepreneur, nothing is as challenging as financial planning. For Vivek too, this was the biggest challenge when he is looking at starting his own travel consultancy.
Vivek Mishra, a hard working software consultant, working with a good company isn’t the regular software executive. He wants more out of life and like many people, he harbours a dream of running his own start-up. What he did differently from others is that he didn’t wait out for years to accumulate enough finances that he can start his own company, he wants to take up the challenge early in life.
However, the big question that he is faced with is arranging the start-up capital. Vivek had an ancestral piece of land, which he used to Apply for a Loan Against Property. This turned out to be among the best decisions that the start-up takes.
It All Begins with Money!
One of the first things that you, as a small business entrepreneur will have to plan is your finances. Of course, it is the start-up capital that is the most difficult to raise. Once the business gets going, financial planning tends to get balanced and less stressful, however, when you are new in the business with no prior reputation, credit standing or experience, arranging start-up capital can be quite overwhelming. Vivek got caught in a similar situation when his application for a Business Loan got rejected.
Business Loans are usually highly volatile and securing this loan requires a lot of paperwork to be in place along with several criteria to be fulfilled. Not every start-up is eligible or meets all the requirements. That being said, a Business Loan is not the only option for securing your start-up capital. There are quite a few other options, a Loan Against Property (LAP) being the safest.
LAP or Property Loans are perhaps the most risk-free for the banks and financial corporations. This is the reason why the interest rate on such loans is a lot less when compared to personal unsecured loans and even Business Loans. In this regard, it is often considered to be a financially viable decision to opt for a LAP than a direct business or Personal Loan for business growth.
How Did the Loan Against Property Work for Vivek and How It Can Work for You?
When you use the property as collateral, securing a loan on it is rather easy simply because the loan that you are now taking is all secured. Banks and financial corporations are more at ease to advance the loan as there is a property that is acting as a security, which the bank can use to secure its loan amount bank, in case of a default.
When you apply for a property loan, there are a couple of things that you need to consider. Here are some pointers that can help you just the way they helped Vivek.
1. Keep a Detailed Account of Your Asset’s Worth
Banks and financial institutions are rather conservative about property valuation by a professional property valuation company. This is important as the bank will need to consider the fact that in case of payment default, the property has to be sold to clear the outstanding dues.
There can be times when a property owner may assume the value of a property to be a lot more than a bank may estimate it at. To be sure, a property appraiser’s report can be helpful.
2. What Assets Can You Use?
Many property owners are not fully aware of the properties that they can use to get a Loan Against Property. Vivek has a house that is already on a mortgage. When he was researching about his Business Loan challenges he understood that he can still use his mortgaged house to seek further financing option for a Business Loan as the bank can use his collateral by refinancing your loan in case of a default.
A fundamental truth that every entrepreneur should make a note of is that every business, no matter whether small-scale, start-up or a large corporation, will consistently need finances for business operations. Particularly for a growing business, getting the right financial assistance at the right time can expand the company’s potential manifold. With the best Loan Against Property deals, this is now feasible!
Written By Reshma RawatAssistant Content ManagerCredit Cards, Credit Score, Personal Loan, Home Loan, etc.
Reshma Rawat is a passionate writer with a decade of experience in writing for a variety of domains (finance, technology, lifestyle, e-commerce, real estate, etc.). Currently, she is working as Assistant Manager - Content @MyMoneyMantra and writes blogs & webpages on financial products (loans, credit cards, insurance, government financial policies, mutual funds, etc.).
