Business needs are soaring every day, requiring an increased capacity to scale up in a short time and deliver better products and services. However, the financial backing to keep up the continuous business expansion and growth is not always readily available. In these situations, a business loan against property offers a solution. It allows you to access the equity tied up in your residential or commercial property and manage cash flow issues effectively without needing to sell your asset.
By leveraging your property as collateral, you can get a secured loan with relatively low interest rates. This approach provides financial flexibility and can be a lifeline for property owners facing a cash crunch or needing funds for business operations or personal needs.
Smart Ways to Unlock Cash Without Selling Your Property
If you’re facing a financial shortfall but don’t want to sell your property, there are several smart ways to unlock funds while keeping your asset.
Business Loan Against Property
A Business Loan Against Property (BLAP) is where you borrow against the market value of your property. By using the property, you can secure funds at relatively lower interest rates compared to personal loans.
Rent Advances
Property owners can negotiate for advance rent payments from tenants. This can provide a small, immediate upfront payment to manage capital flow issues, particularly in the case of immediate financial needs.
Co-Investing
Co-investing in property allows you to share the ownership with other investors. You can sell a part of your property or bring in an investor to raise funds while still retaining partial ownership.
Leaseback Options
A sale and leaseback option involves selling the property to a lender or financial institution and leasing it back. This allows the owner to free up cash while continuing to occupy and use the property.
Refinancing and Restructuring: A Lifeline for Property Owners
When financial stress hits, refinancing and restructuring existing loans can offer much-needed relief.
Refinancing (Replacing Current Loan with a New One)
This involves replacing your current loan with a new one at a lower interest rate, potentially allowing you to access additional funds (top-up) while reducing your monthly payments and saving on interest, easing your financial pressure.
EMI Restructuring
If loan repayments are challenging, restructuring your EMIs can provide flexibility. Lenders may offer to extend the tenure, reduce the EMI amount, or adjust the repayment schedule to better suit your financial situation.
These options help property owners manage revenue streams and make repayments more manageable during tough times.
Turning Property into a Steady Income Source
If you’re facing a financial shortfall but want to avoid selling your property, there are several ways to generate a steady income:
• Co-living: Rent out individual rooms to multiple tenants instead of leasing the entire property. This maximises rental income, especially in high-demand areas.
• Short-Term Rentals: Online platforms like Airbnb allow property owners to rent out their property for short durations, earning higher rental income compared to long-term leases.
• Commercial Leasing: Rent out commercial properties, which often offer higher and more stable rental income than residential properties.
• Fractional Ownership: Share ownership of a high-value property with multiple investors to reduce financial burden while still earning passive income.
Leveraging a Business Loan Against Property
A business loan against property is a secured loan that can be used for personal or business purposes. The relatively low interest rate, compared to unsecured loans, the quick loan approval, longer tenure, and easy access to working capital help you maximise the value of the property to the best.
Taking a business loan against property requires you to clear some eligibility criteria. Make sure your loan application is equipped with:
- Credit bureau reports to prove creditworthiness
- A business vintage of over three years
Documents Required:
- Three-year balance sheet and ITR
- 12 months bank statement
- GST returns for the current year
- KYC: Aadhar and PAN
- Residence and factory ownership proof
Government Reliefs, Schemes and Support Options for Property Owners
When a property owner is facing a capital deficiency, knowing about relief schemes and support options can make a big difference. These programs offer a financial break while you strategise your next move.
Key support areas include:
- Local propertytax amnesties or rebates for residential and commercial properties — helping reduce the burden of tax dues
- Central government initiatives that improve ownership rights and formalise property documentation, which in turn can boost eligibility when you are applying for a loan. For example, the SVAMITVA Yojana aims to clarify land records and issue property cards across rural India
- Negotiated reliefs in interest payments, tenure extensions, or restructuring help offered to borrowers by lenders during times of stress
Although specific numbers tied directly to interest rates, EMIs, or loan amounts for relief schemes may not always be public, these options support property ownership.
When Selling Might Be the Right Decision
While a business loan against property or other financial strategies can often provide relief, there are times when selling your property might be the best option. Here’s how to evaluate if selling is necessary and how to maximise its value.
- Assess your financial situation: If EMIs and debts are overwhelming and refinancing or debt consolidation isn’t feasible, selling may provide the necessary funds to clear your debts and secure your future.
- Market conditions: Selling in a strong market can fetch a higher price. Monitor market trends and property demand to determine if it’s a seller’s market.
- Long-term vs. short-term needs: Consider whether you need the property for long-term goals (e.g., retirement) or if selling now would better suit your financial needs.
- Maximising value: Ensure your property is in good condition by completing minor repairs. Get a professional appraisal and sell during peak demand seasons to maximise your sale price.
Conclusion: Building Financial Stability with a business Loan Against Property
Property ownership offers a unique opportunity to build wealth, but when facing a capital deficit or rising debts, it’s crucial to leverage your property effectively. Loans against property provide an ideal solution, enabling you to unlock funds while maintaining ownership.
If you’re ready to take control of your financial future, consider applying for a business loan against property with the EFL Clik mobile app. With flexible terms and competitive interest rates, it’s a simple way for small business owners to address immediate financial needs without the stress of selling a property. Plus, EFL’s quick LAP approval process makes it easier for small businesses to access funds when needed most.
FAQs
Why do I feel financially stuck, even with ownership of the property?
Because real estate is an illiquid asset — it holds value but doesn’t always provide immediate cash. Maintenance costs, loan EMIs, and delays in rent can all squeeze your cash flow.
How can I raise quick funds without selling my property?
You can explore options like a business loan against property or a rent advance from tenants to raise funds while keeping your property. Using your property as mortgage collateral is another way to unlock cash quickly without selling, allowing you to secure funds at competitive interest rates.
My tenants stopped paying rent—what can I do to maintain cash flow?
Consider short-term rentals (like Airbnb), leasing to businesses, or renting only a portion of the property. You can also explore rent insurance options for future security.
Are refinancing or top-up loans safe options during a liquidity crisis?
Yes, if managed wisely. Refinancing can reduce EMI pressure by extending tenure or lowering interest rates. However, compare offers carefully to avoid higher long-term costs.
Can I use my property to generate a steady monthly income?
Absolutely — you can rent out unused portions, convert property into PG or co-living units, or lease for commercial use to create consistent income streams.
