Loan Against Property - Loan Against Industrial Property

Loan Against Industrial Property Guide for India

A Loan Against Industrial Property (LAP) is a secured financial product offered by banks and Non-Banking Financial Companies (NBFCs) in India, allowing businesses and individuals to leverage industrial properties as collateral to access funds. Below is a concise guide for your financial website, targeting users in India, to help them understand loans against industrial property.

What is a Loan Against Industrial Property?

A Loan Against Industrial Property is a secured loan where borrowers pledge industrial real estate, such as factories, warehouses, or manufacturing units, as collateral to obtain funds. It is designed for business owners, MSMEs, or individuals needing capital for business expansion, machinery purchase, working capital, or other financial needs. The property remains in the borrower’s possession for operational use during the loan tenure.

How Does It Work?

• Purpose: Funds business needs (e.g., expansion, machinery purchase, working capital) or personal expenses (e.g., debt consolidation, medical costs), with flexible end-use.
• Collateral-Based: The industrial property is hypothecated to the lender, who holds a lien until the loan is repaid.
• Loan Amount: Up to ₹25 crore, covering 40–75% of the property’s market value, depending on the lender and borrower’s eligibility.
• Repayment: Paid through Equated Monthly Installments (EMIs) over 7–20 years, with some lenders offering overdraft facilities.
• Disbursal: Funds are credited to the borrower’s account within 7–20 days, subject to property valuation and document verification.

Key Features

• Loan Amount: ₹30 lakh to ₹25 crore, based on property value, borrower’s financial profile, and lender policies.
• Interest Rates: 8%–20% p.a. (floating or fixed), varying by lender, credit score, and property type.
• Loan Tenure: 7–20 years, offering manageable EMIs for high-value loans.
• Loan-to-Value (LTV) Ratio: 40–75% of the property’s market value, lower for plots (40–60%) and higher for built-up factories (60–70%).
• Processing Fees: 0.75–2% of the loan amount, plus GST, or fixed fees (e.g., ₹10,000–₹50,000).
• Property Types: Factories, warehouses, industrial sheds, manufacturing units, R&D centers, or vacant industrial plots in approved areas.
• Approval Time: 7–20 days, subject to property valuation and legal checks.

Benefits

• High Loan Amounts: Access substantial capital (up to ₹25 crore) for business growth or large expenses.
• Competitive Interest Rates: Lower rates (8%–20%) compared to unsecured loans due to collateral.
• Flexible Usage: Funds can be used for business expansion, machinery purchase, debt consolidation, or personal needs.
• Long Tenure: Repayment periods up to 20 years reduce EMI burden.
• Retain Property Use: Borrowers continue using the property for operations while repaying the loan.
• Tax Benefits: Interest paid may be tax-deductible for business purposes, subject to Income Tax Act provisions.
• Government Support: MSMEs may benefit from schemes like CGTMSE for partial collateral-free options or subsidies.

Eligibility Criteria

• Age: 18–75 years at loan maturity (some lenders allow up to 85 years with a co-applicant).
• Applicant Type: Individuals, proprietorships, partnerships, private/public limited companies, or Hindu Undivided Families (HUFs).
• Business Stability: Minimum 1–3 years of operations, with annual turnover above ₹50 lakh and profit of ₹3 lakh p.a. for some lenders.
• Credit Score: 650–750+ for better approval chances and lower rates.
• Property Ownership: Must be owned by the applicant or co-owned with a close family member, free from legal disputes, and compliant with the SARFAESI Act.
• Property Type: Approved industrial properties (e.g., manufacturing units, warehouses, or plots in recognized industrial zones).

Documents Required

• Identity Proof: Aadhaar Card, PAN Card, Passport, Voter ID, or Driving License (for applicant/co-applicant).
• Address Proof: Utility bills, Aadhaar Card, Passport, or rent agreement.
• Business Documents: GST registration, business license, partnership deed, or Memorandum and Articles of Association.
• Financial Documents: 2–3 years’ ITRs, profit and loss statements, balance sheets, audited by a CA (if required).
• Property Documents: Title deed, sale deed, property tax receipts, approved building plans, and valuation report.
• Bank Statements: Last 6–12 months’ statements showing business transactions.
• Others: Loan application form, recent photographs, and rental agreements (if property is leased).

Risks to Consider

• Property Seizure: Defaulting on EMIs may lead to the lender seizing the property under the SARFAESI Act.
• Higher Rates for Plots: Industrial plots have lower LTV (40–60%) and higher rates compared to built-up properties.
• Floating Interest Rates: EMIs may increase with market fluctuations if a floating-rate loan is chosen.
• Prepayment/Foreclosure Charges: 2–4% of outstanding amount for fixed-rate loans or non-individual borrowers; may be nil for individual floating-rate loans after a lock-in period.
• Depreciation: Property value may fluctuate, affecting future borrowing capacity.
• Legal Risks: Properties with unclear titles or disputes may lead to loan rejection or delays.
• Business Risks: Market slowdowns or operational issues may impact repayment capacity.

Popular Lenders in India (2025)

• RattanIndia Finance: Loans up to ₹10 crore at 8–20% p.a., with LTV of 40–70% and quick disbursal.
• Bajaj Finance: Loans up to ₹10.5 crore at 8–20% p.a., with tenures up to 15 years and disbursal in 72 hours.
• Standard Chartered: Loans up to ₹25 crore at competitive rates, with tenures up to 20 years and LTV up to 60%.
• Poonawalla Fincorp: Loans up to ₹25 crore at 9.5%–18% p.a., with minimal paperwork.
• SBI: Loans up to ₹20 crore at 8–12% p.a., with LTV up to 50% under MSME schemes.
• ICICI Bank: Loans up to ₹10 crore at 8.5–13% p.a., with LTV up to 75% and overdraft options.
• Joy Loan: Loans up to ₹200 crore at 9.4%+ p.a., tailored for Delhi/NCR industrial areas.

Why Choose a Loan Against Industrial Property?

A Loan Against Industrial Property provides substantial capital for business growth or personal needs without relinquishing property ownership. With competitive rates, long tenures, and flexible usage, it’s ideal for MSMEs and industrialists. Government schemes like CGTMSE enhance accessibility for small businesses. Timely repayments are critical to avoid property seizure and ensure operational continuity.

Get Started Today!

Compare offers from top lenders like RattanIndia Finance, SBI, or Poonawalla Fincorp. Use an EMI calculator to plan repayments and consult a financial advisor to align the loan with your goals. Leverage your industrial property for growth today!

Disclaimer: Interest rates, LTV ratios, and terms vary by lender and are subject to change. Verify details with your chosen financial institution and ensure property compliance with regulatory standards before applying.