How to get a Commercial Land Loan

What is a commercial land loan?

Banks and financial institutions made loans for commercial real estate secured by any type of commercial property mortgage. Therefore, getting a loan is the ideal option if you’re trying to acquire a business property. In the last year itself the commercial real estate market grew staggering 38 percent which indicates the willingness of lending institutions to provide a loan for commercial activities.

With a commercial land loan, you can mortgage your own commercial real estate to obtain sizeable capital. The property you utilize for your business or any other endeavour that generates revenue is considered commercial property. If you need large, reasonably priced funding for something like business expansion or the purchase of expensive gear, you can choose a commercial property loan. 

Types of commercial property loan:

  • Term Loan-

Term loans are given out for a predetermined amount of time, as the name suggests, and the borrower has that time to repay the loan plus interest. It can also be split into two categories: unsecured loans and secured loans (with collateral). Because secured loans have collateral, they have lower interest rates than unsecured loans.

  • Bank overdraft facility-

A bank overdraft facility is an option for a business that requires quick cash to pay a bill but doesn’t have the necessary amount in the account. Businesses might take out more money with these loans than they have in their current account. Cheaper interest rates and less paperwork are the two main benefits of bank overdrafts.

  • Commercial Mortgage loan-

Commercial mortgages, also referred to as business mortgages, enable business owners to take out loans to buy land or commercial real estate for their enterprise. The loan is secured by the property. 

  • Letter of credit-

A letter of credit is a document issued by a financial orgainzation to the customer’s suppliers to guarantee that the customers can make the payments on time for the goods provided. 

Importance of property loan:

  • Lowest Interest Rate:

Interest rates on loans for non-residential property are generally lower than those on other loan products. Non-residential property loan interest rates are kept lower since the banks have the legal right to the property during the loan term and because there is less risk involved.

  • Quick Approval of loan:

Comparatively speaking to other unsecured loans, the loan approval process is simpler. Due to the property’s mortgage providing security to the lenders, the approval process is expedited.

  • Tax Benefits:

You are qualified for specific non-residential property loan tax benefits on the interest and processing costs if you are using the loan amount for business purposes. If you use the loan amount to purchase a residential property, you may also be eligible for a tax deduction.

Eligibility Criteria for a Loan Against Commercial Property:

Buying a loan against a commercial property criteria is easy to follow 

Age Limit21 to 60 Years
CIBIL Score 750 Plus

Documents Needed:

The following are the documents needed to apply for a commercial property loan:

  • KYC documents for proof of identity (PAN Card, Aadhar Card, Passport, Driving Licence) and proof of address (Driving Licence, Aadhar Card, Passport)
  • Bank statement of last six months and income statements
  • Audited financial results
  • Income tax returns of last two years
  • Documents related to the property to be offered as collateral


You should weigh factors including interest rates, credit scores, and other costs before choosing a commercial loan. One can find what works for them by looking at these characteristics. Additionally, it keeps customers from making bad decisions like choosing the wrong lender, a term that is too long, or taking on more debt than they need. Moreover, their credit rating declines when they fail to make a payment.

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