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A commercial property loan, often referred to as a business or commercial land loan, is offered by various lenders in India. This is to facilitate the purchase of commercial properties, including land and structures, for business purposes. These loans meet the unique needs of entrepreneurs and businesses looking to acquire or invest in commercial real estate.
Prominent financial institutions offer competitive commercial property loan options, allowing individuals to secure funds to purchase commercial assets. These loans also serve as a crucial tool for businesses seeking to expand, upgrade, or establish a physical presence by acquiring properties for operational or investment purposes.
Commercial property loans in India are designed with businesses in mind, offering tailored solutions for buying land, buildings, or both. You can secure substantial loan amounts with competitive interest rates, making repayments manageable and enhancing profitability.
If you want to apply for a commercial property loan in India, here’s what you need to know.
When applying for a commercial property loan, you can expect to encounter a few charges.
You’ll need to provide important documents to apply for a commercial property loan.
Working on a commercial property loan is not as complicated as it sounds. A commercial property loan is like borrowing money from a bank to buy a place where you can run a business. This could be a shop, an office, a factory, or even land when you plan to build something for your business.
Let’s say you want to start a restaurant and need a place to set it up. You find a great location but don’t have enough money to buy it. That’s why a commercial property loan comes in handy. You go to a bank and ask them for a loan to buy that property. The bank checks if you are eligible, and if they approve, they give you the money you need to buy the place.
Now, you can start your restaurant in that space and slowly pay back the money you borrowed from the bank, plus a little extra (called interest) over time. It’s like a helping hand from the bank to get your business up and running in the right place!
If you are a salaried person in India and you want to take a loan on a commercial property, you might be interested in the following information:
To qualify for a commercial property loan in India, you must be an Indian citizen aged between 28 and 58 with a stable income ranging from Rs. 25,000 to Rs. 35,000, based on your city. A good credit score of 750 or above is crucial for favourable loan terms. Owning a dispute-free commercial property that meets valuation and location standards is essential.
| Bank | Interest Rate | Loan Amount | Loan Tenure | Processing Fee |
| ICICI HFC | 9.5% – 11.5% p.a. | ₹ 3 lakh – ₹ 5 crore | Up to 15 years | Up to 2% of the loan amount |
| HDFC Bank | 8.9% – 10.5% p.a. | ₹ 10 lakh – ₹ 15 crore | Up to 15 years | Up to 1.5% of the loan amount |
| Axis Bank | 9.75% – 11.25% p.a. | ₹ 50 lakh – ₹ 5 crore | Up to 20 years | Up to 1% of the loan amount |
| SBI Bank | 9.95% – 11.45% p.a. | ₹ 50 lakh – ₹ 7.5 crore | Up to 15 years | Up to 1% of the loan amount |
| Kotak Mahindra Bank | 9.25% – 11% p.a. | ₹ 50 lakh – ₹ 10 crore | Up to 15 years | Up to 2% of the loan amount |
| IDBI Bank | 9.65% – 10.65% p.a. | ₹ 10 lakh – ₹ 5 crore | Up to 10 years | Up to 1% of the loan amount |
| IndusInd Bank | 9.5% – 12% p.a. | ₹ 10 lakh – ₹ 15 crore | Up to 15 years | Up to 2% of the loan amount |
| PNB Housing Finance | 9.75% – 11.25% p.a. | ₹ 15 lakh – ₹ 50 crore | Up to 20 years | Up to 2% of the loan amount |
| Bajaj Finserv | 10% – 12% p.a. | ₹ 20 lakh – ₹ 3.5 crore | Up to 20 years | Up to 3% of the loan amount |
| LIC Housing Finance | 8.7% – 10.25% p.a. | ₹10 lakh – ₹15 crore | Up to20 years | Up to1% of the loan amount |
Before getting a commercial property loan in India, there are some things that you need to know and consider, such as:
Here are some top banks and their commercial property loan offers:
| Bank | Interest Rate | Loan Amount | Loan Tenure | Processing Fee |
| SBI | 8.50% to 9.40% p.a | Up to Rs. 50 crore | Up to 15 years | 1% of the loan amount + GST |
| Bank | Interest Rate | Loan Amount | Loan Tenure | Processing Fee |
| HDFC | 8.75% to 9.40% p.a | Up to Rs. 30 crore | Up to 15 years | 1% of the loan amount + GST |
| Bank | Interest Rate | Loan Amount | Loan Tenure | Processing Fee |
| ICICI | 8.75% to 9.40% p.a | Up to Rs. 5 crore | Up to 15 years | 1% of the loan amount + GST |
| Bank | Interest Rate | Loan Amount | Loan Tenure | Processing Fee |
| Axis Bank | 10.50% to 11.50% p.a | Up to Rs. 5 crore | Up to 20 years | 1% of the loan amount + GST |
| Bank | Interest Rate | Loan Amount | Loan Tenure | Processing Fee |
| BOB | 10.85% p.a. onwards | Up to Rs. 25 crore | Up to 15 years | 1% of the loan amount + GST, capped at Rs.10 lakh |
| Bank | Interest Rate | Loan Amount | Loan Tenure | Processing Fee |
| LIC HFL | 9.50% to 11.50% p.a | Up to Rs. 10 crore | Up to 15 years | 1% of the loan amount + GST, capped at Rs.10,000 |
Ideally, the credit score preferred by many lenders remains 680 or above; however, depending on other factors like good turnover, location of the property value, etc., borrowers can afford a slightly lower credit score.
Various commercial property loans in India are curated to cater to a vast customer base. However, a few loan types stand out, including working capital and term loans.
Commercial property loans are specifically designed for commercial spaces like shops, offices, warehouses, etc. One does not have the provision to use a home loan for commercial purposes.
In India, a loan taken for purchasing, constructing, repairing, or renovating a commercial property allows for a deduction of the interest paid under Section 24(b) of the Income Tax Act, up to Rs. 2 lakh annually for self-occupation or business use, and without limit if the property is rented out.