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Questions Asked by Lenders While Applying for Startup Loan on a Property

In the retail segment, credit sanctioned towards industries in India grew by 6.9% in April 2019 compared to the same time in the previous year. The primary reason behind this growth is the easy availability of a start-up loan on the property from various lenders across the country. Financial institutions have also eased the eligibility criteria for this purpose.

However, they may ask a few essential questions to determine the repayment capability of borrowers. Here is a list of questions that you may encounter when you apply for such credits.

loan against property

What is your business plan?

A business plan is one of the primary factors that a financial institution takes into account before approving an application for a loan for a start-up. A plan that comes with a potential growth opportunity is likely to be enough to get an application approved. It ensures that your business will have proper cash flow in the future and you will repay the loan effectively.

Furthermore, you should also develop a contingency scheme to reduce the risk factor for a lender. It will provide a mature look to your plan and help you to avail a loan against property for business start-ups with ease.  

To develop a concrete business plan, you should also take into account various factors including the current social, economic, and political situation currently prevalent in this country.

How much loan amount do you require?

Loan for start-ups come with a high credit amount. Financial institutions can offer an amount of up to 80% of the current property value. 

However, availing a high amount may not end up being a wise decision every time. Lenders can reject your application if they consider your credit-hungry.

On the other hand, if you apply for a reasonable amount after careful evaluation, your entrepreneurial maturity and financial awareness will be portrayed. It will ensure that lenders consider your application less risky.

How will you use the loan amount?

Before approving a loan application, lenders conduct a thorough evaluation on how a borrower will repay their debt. Hence, careful planning on investing the amount and ensuring a smooth running of a business can help massively in procuring a start-up loan on the property.

Also, a detailed step by step expenditure plan will ensure that your business is going to garner profits in the future, and you can repay your debt effectively. Hence, how you use a loan against property and to know about loan against property eligibility in your start-up is a massive factor that lenders consider.

What is your credit score?

Lenders will make credit inquiries to check your CIBIL score. An individual with a decent credit score is likely to avail a loan against property along with favorable terms. 

What is your financial standing?

Lenders can ask the details regarding your business finances to ensure that you can repay the loan without defaulting. Your existing assets and liabilities will be taken into account before approving credit. 

What is your repayment strategy?

Repayment is the biggest concern when a lender approves a loan application. They require a concrete repayment strategy to gauge the risks involved with a credit. You must reassure a lender that you have the capability to repay the debt irrespective of the difficulties that can arise in the future.

To help you in this aspect, you can mention any successful ventures you may have previously. 

Furthermore, ensure that you opt for a loan tenor that complements your repayment strategy. Financial institutions offer an extensive range of tenor options to ensure that a borrower can develop such facilities effectively.

Bajaj Finserv is one such NBFC that offers a loan tenor ranging from 2 to 20 years along with a plethora of other benefits.

They also provide pre-approved offers on such credits to minimize the time required to avail them and to ensure that the process is straight-forward. These offers cover various financial products and services, including home loans, business loans, and more. Take a look at your pre-approved offer by submitting a few required details.

The questions that lenders can ask while reviewing a start-up loan on property application is mentioned above. Also, ensure that you meet the required eligibility criteria to avoid rejection.

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