A Comprehensive Guide to Business Loans Against Property and Shares

MUMBAI, India - Aug. 9, 2023 - PRLog -- Starting a small business can be a thrilling and rewarding endeavour, but it often requires significant financial investment. For many entrepreneurs, securing funding is a critical step in turning their dreams into reality. Fortunately, there are various options available, including small business loans for startups. In this guide, we will explore two common types of financing: business loans against property and loans against shares promoter funding. We will also explain the concept of loan against physical shares and the role of non-banking finance companies in providing such loans. Additionally, we will touch on how to arrange loans from banks. Let us dive in!

Business Loans Against Property:

Business loans against property, also known as secured business loans, involve using a property or real estate asset as collateral to obtain funding. This type of loan provides the lender with a sense of security, as they have the option to sell the property to recover the outstanding debt if the borrower defaults on the loan.

Pros: Lower interest rates: Since the loan is secured, lenders often offer lower interest rates compared to unsecured loans.

Higher loan amount: The collateral's value allows you to access larger loan amounts.

Longer repayment tenure: Secured loans often come with extended repayment periods, easing the financial burden on the borrower.

Loans Against Shares Promoter Funding:

Loans against shares promoter funding cater specifically to business promoters or major shareholders who wish to raise capital by pledging their shares. In this scenario, shares of the company act as collateral, and the loan amount is determined based on the value of these shares.

Pros: Access to quick funding: The loan application and approval process are typically faster compared to traditional business loans.

Retaining ownership: Promoters can continue to retain ownership and control of the business while using the pledged shares as collateral.

Loan Against Physical Shares:

In the past, shares of companies were issued as physical certificates. Although electronic shares have become the norm, some people may still hold physical share certificates.

Pros:

Utilizing old assets: People with physical share certificates can unlock the value of these assets without selling them.

Borrower-friendly: The requirements for such loans may be more relaxed compared to traditional bank loans.

Non-Banking Finance Company (https://www.libordbroking.com/financial-services) (NBFC):

A Non-Banking Finance Company (NBFC) is a financial institution that provides various banking services like loans, advances, and investments but does not hold a banking license. These institutions play a vital role in the financial ecosystem by catering to the credit needs of individuals and businesses, especially those who may not qualify for loans from traditional banks.