Are you an Indian business owner or professional considering raising funds by leveraging a commercial building or shop? A Loan on Commercial Property (LACP) can be a powerful financing option, offering larger loans, lower interest rates, and longer repayment tenures.
This guide explains who can apply, eligibility criteria, interest rates, documentation, and tips to boost your chances.
What Is a Loan on Commercial Property?
A loan on commercial property (also known as Loan Against Property – Commercial) is a secured credit facility that lets you mortgage your commercial asset—such as a shop, warehouse, or office building—to raise funds.
As per the Reserve Bank of India, these loans fall under the “secured term loan” category and are subject to lending and LTV guidelines applicable to LAP products.
Who Can Apply for a Loan on Commercial Property?
Salaried Individuals
Employed individuals with ownership of a commercial property—such as an office or shop—can apply. Banks typically require:
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Age between 21–65 years
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Regular salary and service history
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Completed property ownership
See eligibility grids on the State Bank of India’s commercial LAP portal.
Self‑Employed Professionals
Doctors, CAs, engineers, or consultants who own commercial premises fit this profile. You must provide:
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Professional certification
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ITR and audited statements for the last 2–3 years
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Clear property title
ICICI Bank outlines professional borrower norms in its Loan Against Property documentation section.
Business Owners & Traders
If your business runs from a shop, warehouse, factory, or office you own, you’re eligible for LACP. Requirements include:
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Business vintage of at least 3 years
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Consistent revenue and profit
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Valid business registration (GST, Shops Act, etc.)
HDFC Bank’s LAP page specifically for business owners provides more details on commercial eligibility: HDFC LAP for business.
Existing LAP Borrowers
If you already hold a residential LAP, owning a commercial property may allow you to apply for a separate commercial LAP, provided your loan-to-value and repayment capacity thresholds are satisfied.
How Much Can You Borrow?
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LTV ratio for commercial property typically ranges from 50% to 70%, depending on location, property age, and borrower profile.
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The maximum amount may go up to ₹10–15 crores with top lenders, provided the property value supports it.
Use SBI’s loan against property calculator to get an initial estimate of eligible amount and EMI.
Interest Rates & Tenure
Interest Rates
Interest rate structures vary by bank and borrower profile. As of 2025:
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SBI offers commercial LAP rates starting around 10.75% p.a.
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HDFC and ICICI commercial mortgage borrowers may see rates between 10% and 11%, depending on loan size and credit quality.
You can compare SBI’s rate grid on its LAP interest rate page and HDFC’s business LAP rates via HDFC’s official product rates page.
Tenure
Commercial LAP tenure usually spans 5 to 15 years, with higher repayment flexibility for stable borrowers.
The RBI’s Reserve Bank of India guidelines regulate maximum tenure to limit lender exposure.
Documents Required (Commercial Property Loan Eligibility)
| Category | Documents Required |
|---|---|
| Identity & Address Proofs | PAN, Aadhaar, Passport, Driving License |
| Property Documents | Sale deed, map/layout, completion certificate, tax receipts |
| Income Proof | Salary slips/Form 16 for salaried; ITR, audited accounts for self-employed/business |
| Business Proof | GST registration, trade license, bank statements (6–12 months) |
| Property Valuation & Insurance | Bank-appointed surveyor report; building insurance documents |
Banks like ICICI and HDFC list essential documents on their official portals:
Application Process
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Online/Offline Enquiry
Submit basic details online or at a branch. -
Document Verification & Income Assessment
Bank evaluates title deeds, income proof, and bank statements. -
Property Valuation & Legal Check
Lenders appoint technical and legal experts to assess property. -
Sanction & Offer Letter
Receive terms including loan amount, tenure, rate, fees. -
Agreement & Disbursement
Sign registered mortgage or equitable mortgage; funds released within days. -
Disbursal
Amount credited to your account in 3–7 business days after legal completion.
Most banks now complete steps 1–3 digitally, which reduces processing time significantly.
Advantages of a Commercial Property Loan
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Access to high loan amounts based on property value
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Lower interest rates than unsecured business loans
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Longer repayment schedules, easing EMI pressure
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Ability to retain property ownership while leveraging capital
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Flexible usage including business expansion, equipment purchases, or refinancing
Risks & Things to Consider
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Foreclosure Risk if you default on EMIs—the lender holds the legal right to recover and sell the property under SARFAESI Act, 2002
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Processing and Legal Fees which vary between 0.5% to 1.5% of loan value
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Tax Treatment depends on use—LAP used for business can qualify for deduction (Refer Income Tax Group)
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Property Liquidity – Commercial properties may have lower resale demand in small towns
FAQs on Loan on Commercial Property
1. Who is eligible for commercial property loans in India?
Salaried individuals, self-employed professionals, business owners, or traders who own commercial property with clear title and verifiable income are eligible.
2. Can NRIs apply for a commercial LAP?
Some banks permit NRIs to avail loans using commercial properties located in India; check eligibility on HDFC NRI services or SBI NRI LAP page.
3. Are commercial property loans cheaper than other business loans?
Yes, because these loans are secured, they generally offer rates between 10–11% versus 12–18% on unsecured business loans.
4. Can I get an interest-only repayment period?
Some banks offer a short “interest only” period of 6–12 months before starting principal repayment—check product terms on the bank portal.
5. Can a firm with more than one commercial property apply for multiple loans?
Yes—each property can be assessed independently provided combined LTV and repayment profiles are satisfied.
Final Thoughts
Availing a loan on commercial property can unlock significant capital for business growth, debt restructuring, or strategic investment. With proper documentation, clear ownership, and sound financials, you can access attractive rates and tenure options.
Plan your application carefully—evaluate interest rates, LTV caps, tenure, and legal implications before moving forward.
✅ Ready to Apply?
Contact our experts to evaluate your eligibility or use our quick calculator to check your loan potential.
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Disclaimer: Interest rates and norms are indicative as of mid-2025. Always verify from bank-specific product pages and RBI guidelines before applying.
