Is it possible to receive a business loan to operate a shop in a rented space?

Can you acquire a business loan if you want to operate your company in a rented space? The answer is a loud ‘yes,’ because the likelihood of securing the loan depends on various variables other than whether or not you own your premises. Nowadays, you can quickly apply for loans online and submit all of your paperwork, which results in quick approvals and administration.

Documents necessary for a commercial loan

In most circumstances, you will be required to provide the following documents:

• Lease/rent agreement
• Company Permanent Account Number (PAN)
• Aadhaar and PAN cards of company promoters/proprietors/directors
• Bank statements
• Proof of company registration or partnership deed
• Income Tax Return (ITR) of companies and individuals
• Audited company financials and books of accounts

What you should know before applying for a business loan

Keep the following considerations in mind as you investigate lending options:

• Repayment duration with a manageable Equated Monthly Instalment (EMI)

• Creditworthiness, which suggests that all corporate partners have a high Credit Information Bureau India Ltd (CIBIL) score.

• Your proven track record of managing or repaying past business loans.

• Strong firm revenues to allow debt repayment.

Factors influencing loans against rental agreements

• This loan is available to those who have rented a residential or commercial property for a specified period of time.

• Loans may be applied for by joint or solo business owners.

• The loan can be used for any asset acquisition, business development, or business necessities.

• The loan is more like a personal loan in that it may be used for a variety of purposes.

• Banks may lend against the rental agreement or future rent receivables if the loan is obtained by the landlord.

• What works well for applying for a business loan if you have a rented store is that banks favour disbursing these loans for commercial properties due to the greater potential rental returns.

What to remember

You do not need to submit any collateral if you are asking for a business loan with a shop in a rented location. If you, your partners, or your company as a whole can readily repay the loan and are eligible in terms of income and credit score, you can simply obtain the loan requested. Furthermore, you may use your equipment as collateral or any other asset to get a loan faster and at a reduced interest rate. You may also look at financing choices based on your lease or rent arrangement.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.