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Business loan against property: borrow against property you own

A business loan against property is a secured loan where a business owner mortgages residential, commercial or industrial property they own to borrow a larger amount, usually over a longer tenor than an unsecured loan. The lender still checks the business's cash flow, and the property is at risk on default. It suits a business with property and steady cash flow.

Loan Against Property for a growing business
How Capnix works

Capnix is not a lender and never lends its own capital. The lender values the property and sets the amount, tenor and rate. We present your repayment strength and property together, share your file with lenders on our panel only after you give consent, and run the lender application. Getting your loan through us costs you nothing.

Loan
Loan Against Property
Decided by
The lender
Cost to you
₹0
Last checked

The facts that matter

Fact What it means Source
Partly secured loans Under CGTMSE's hybrid security product, a lender may take collateral for part of a loan and the unsecured part, up to ₹10,00,00,000, can be covered. CGTMSE scheme document, updated 01-Apr-2026 Checked 02-Oct-2026
Fully secured loans A credit facility sanctioned against collateral or a third-party guarantee is not eligible for CGTMSE cover, except the hybrid portion. CGTMSE scheme document, updated 01-Apr-2026 Checked 02-Oct-2026
Default A term loan with interest or an instalment overdue for more than 90 days is classed as a non-performing asset. RBI master circular on income recognition and asset classification Checked 02-Oct-2026
Notice before enforcement A secured lender must serve a 60-day notice before it takes possession or takes other steps under the SARFAESI Act. RBI circular on the SARFAESI Act,
30-Jun-2004 Checked 02-Oct-2026
Early repayment No pre-payment charge on floating-rate business loans to individuals and micro and small enterprises at most banks and larger NBFCs, from 01-Jan-2026. RBI pre-payment directions,
02-Jul-2025 Checked 02-Oct-2026

How a loan against property works for a business

You mortgage property you own: residential, commercial or industrial. The lender values it and sets the loan amount. The lender also checks the business's cash flow, so the property alone does not decide the loan.

How the money may be used, and which property types qualify, are the lender's rules.

Secured or unsecured: when property makes sense

The rows below describe usual lender practice, not rules. Each lender sets its own terms.

Loan against property Unsecured business loan
Amount Larger, linked to the property's value Smaller, linked to cash flow
Tenor Longer Shorter
Cost Often lower, because the lender holds security Often higher, because it does not
Risk to your property Yes, if you default No property is pledged
Speed Slower, because of valuation and legal checks Usually faster
Documents Business papers plus property papers Business papers only

Partly secured loans and CGTMSE

A lender may take collateral for part of a loan and cover the unsecured part under CGTMSE's hybrid security product, up to ₹10,00,00,000. A loan fully secured by collateral is not eligible.

Cover applies to micro and small enterprises only, and the lender applies for it after sanction.

Source: CGTMSE scheme document, updated 01-Apr-2026, checked 02-Oct-2026.

Risks to understand before you mortgage property

A loan against property puts the property at stake. Know the sequence before you sign.

  • If interest or an instalment stays overdue for more than 90 days, a term loan is classed as a non-performing asset.
  • A secured lender must then serve a 60-day notice before it takes possession or takes other steps under the SARFAESI Act. You can object, and the lender must give reasons if it rejects the objection.
  • After the lender acts and before a sale, you can appeal to the Debts Recovery Tribunal.
  • Talk to the lender early if repayments slip. Co-owners and the title must be clear before you apply.

Source: RBI circular on the SARFAESI Act, 30-Jun-2004, checked 02-Oct-2026.

What lenders typically publish

Rate cards the lenders publish themselves, read on the date shown.

Published rate cards, as of 02-Oct-2026

Lender Rate a year What else the page says Source
Bank of Baroda (public sector bank), above ₹25,00,000 up to ₹7,50,00,000 CMR 1: 8.20% to 9.65%. CMR 6: 10.35% to 15.60% Priced by CIBIL MSME Rank (CMR) and by how much hard security covers the loan. Bank of Baroda MSME loan rates Checked 02-Oct-2026
Bandhan Bank (private bank), secured business loans 11.69% to 15.18% Processing fee up to 2% plus taxes. Unsecured loans at the same bank are 13.00% to 25.91%. Bandhan Bank business loan page Checked 02-Oct-2026
ICICI Bank (private bank), secured facilities Up to the repo rate plus 6.0% Published as a ceiling for loans outside priority sector lending. Processing fee up to 2% plus taxes. ICICI Bank schedule of charges Checked 02-Oct-2026

Each lender publishes these for business loans in general. They are not offers, none is a Capnix rate, and your rate is set by the lender.

Fees and charges

Charge What to expect Source
Processing fee, one bank Bandhan Bank: up to 2% plus taxes. Bandhan Bank business loan page Checked 02-Oct-2026
Penal charges A penal charge, not extra interest. It cannot be added to the loan to earn more interest. RBI penal charges circular,
18-Aug-2023 Checked 02-Oct-2026
Early repayment None on floating-rate business loans to individuals and micro and small enterprises at most banks and larger NBFCs, from 01-Jan-2026. RBI pre-payment directions,
02-Jul-2025 Checked 02-Oct-2026
Key Facts Statement A standard statement with the annual percentage rate and every charge, before you sign. RBI Key Facts Statement circular,
15-Apr-2024 Checked 02-Oct-2026
Charges outside the statement Any fee left out of the Key Facts Statement needs your explicit agreement before it can be charged. RBI Key Facts Statement circular,
15-Apr-2024 Checked 02-Oct-2026

Worked example: ₹50,00,000 over 84 or 120 months

A business borrows ₹50,00,000 against property at 11.69% a year, the lower end of the secured range Bandhan Bank publishes. It is an example, not an offer. Your rate is set by the lender, and valuation, legal and processing charges are extra.

84 months 120 months
Loan amount ₹50,00,000 ₹50,00,000
Monthly instalment ₹87,437 ₹70,842
Total interest ₹23,44,700 ₹35,01,077
Total repaid ₹73,44,700 ₹85,01,077

Monthly instalment = P x r x (1+r)^n / ((1+r)^n minus 1), where r is the monthly rate and n the number of months. Fees are not included.

Source: Bandhan Bank business loan page, checked 02-Oct-2026.

Who it suits and who it does not

A strong fit if

  • You own property the lender will accept
  • You need a larger amount or a longer tenor
  • Your business cash flow can carry the instalment
Talk to our team

Not a fit if

  • You cannot risk the property if repayments slip
  • You need a small amount quickly (see unsecured business loans)
  • The title is disputed or a co-owner will not agree

Documents lenders usually ask for

One bank's own guide lists the business records below. A loan against property adds papers about the property.

  • Documents that show who owns the property, such as title papers and a municipal tax receipt
  • Bank statements for the last 6 to 12 months
  • GST returns for the last 6 to 12 months
  • Income tax returns and financial statements for 1 to 3 years
  • Business proof and KYC of the business and its promoters

Source: Kotak Mahindra Bank required documents, checked 02-Oct-2026.

Business loan documents checklist

How Capnix fits

  • Start with your free Capnix score. It reads your repayment strength, the part of the case the property cannot replace.
  • Property and business documents go to a lender or a Lender Partner only after you give consent. You can withdraw that consent in your Capnix account.
  • The lender pays Capnix a fee after disbursal. Our fee is never added to your loan, and the lender's own valuation and legal charges appear in its sanction letter.
See if you are loan-ready
Why Capnix

More than a loan. A team that gets you there

A stronger case for larger funding

We present the business need, your repayment ability and the property together, so a lender sees the full picture.

Matched to secured-loan lenders

We approach lenders whose appetite fits your property type, business profile, amount and tenor.

Where this helps

  • Fund expansion or a major business investment
  • Replace higher-cost business borrowing
  • Support a larger working capital need
  • Use property to reach a longer tenor

What happens after you start

We work out your Capnix score first, then work the lender applications with you until the money is disbursed.

See how it works

Calculators, schemes and documents

Related pages and guides

Loan products, rates, and eligibility are determined by the lenders on our panel. Capnix is not a lender and does not lend its own capital. We run your loan journey end to end.

Have a question?
Find answers here

Whether you are scaling up, smoothing cash flow, or buying new equipment, we take your file to the right lender and stay with it through to disbursal.

Talk to our team
It is a loan where you mortgage property you own, such as a shop, factory or other property, to borrow for business use. The lender still checks your business cash flow, your profile and the legal papers of the property.
It depends on the lender's valuation of the property, the type of property and your repayment strength. Lenders usually lend a share of the value, not all of it. Capnix cannot quote a share, because it differs by lender and property type.
Lenders may accept residential property as security for a business loan, subject to their policy. The lender decides which property types it accepts and what use of the money it allows.
It often costs less, because the lender holds security. One bank, for example, publishes secured business loan rates of 11.69% to 15.18% and unsecured rates of 13.00% to 25.91%. You also put the property at risk, so weigh both.
Yes, in one case. Under CGTMSE's hybrid security product, a lender may take collateral for part of a loan, and the unsecured part, up to ₹10,00,00,000, can be covered. A loan fully secured by collateral is not eligible, and cover applies to micro and small enterprises only.
On floating-rate business loans to individuals and micro and small enterprises, most banks and larger NBFCs may not charge for early repayment on loans sanctioned or renewed from 01-Jan-2026. Fixed-rate loans are not covered, so read your Key Facts Statement.
A term loan that is overdue for more than 90 days is classed as a non-performing asset. A secured lender must then serve a 60-day notice before it takes possession or sells, and you can object and appeal to the Debts Recovery Tribunal. Talk to the lender early if repayments slip.
Yes. We compare them on amount, tenor, cost, speed and the risk to your property, then take your file to lenders that fit. The lender decides what it will offer.
The method behind it

Read the business and the collateral. Matched to the right lender

Secured lending is not only about property value. We read the business need, repayment strength, ownership documents, and collateral profile together.

From there we approach lenders whose secured-loan appetite fits the property, the amount, and the tenure, so the structure supports the business need.

Real people,
start to disbursal.

No hand-offs and no generic replies. A dedicated team
works the lenders while you keep running your business.

Talk to our team