Loan Against Property


Our Loans Against Property can help you through life’s biggest moments. Weddings, personal passions, educational fees or career changes - we’ve got you covered. Refinance any existing commercial or residential property at the best rates today.


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Udyog Loan Against Property


Are you an MSME owner looking to scale your business operations? Take your business to new heights with Godrej Capital Udyog Loan Against Property. Our loan solutions enable business owners to get higher loan eligibility by allowing multiple sources of income to be considered. With quick loan approvals and attractive interest rates, our goal is to help your business achieve growth.


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Commercial Property Loan


Take your business to the next level with a Commercial Property Loan that finances construction, extension or improvement to make your business goals become reality. With plans designed for your life, you can rest assured that your business empire is in safe hands.


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Balance Transfer


Transfer your existing loans to Godrej Capital and experience the benefits of lower interest rates, flexible repayment terms, and significant EMI savings. Enjoy higher eligibility, along with a Top-Up loan, to take care of your extra needs.


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Home Loan


Seeking a Home Loan to buy a ready-to-move-in property, an under-construction house, or renovate your current residence? Our Home Loan, featuring low interest rates and flexible EMI plans, is specifically designed to help you accomplish buying your dream home.


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Plot Loan


Found the perfect spot to build your future? Our Plot Loans can help make it yours. Our loans offer you the financial help, low interest rates and flexible payment options you need to construct the home of your dreams.


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Professional Loan for Doctors


Whether you need working capital to start your own clinic or upgrade your current practice with new facilities and hire skilled staff, our professional loans for doctors are here to help you.


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Professional Loan for Doctors


Whether you need working capital to start your own clinic or upgrade your current practice with new facilities and hire skilled staff, our professional loans for doctors are here to help you.


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Professional Loan for CAs


Want to scale your professional practice? We now offer professional loans for doctors and chartered accountants (CAs) to help you expand your existing set-up, hire more staff, buy modern equipment, and fulfil other business requirements to improve and develop your services.


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Business Loan for MSMEs


If you're an entrepreneur with a small business or an MSME and are aspiring to take your venture to greater heights, you're in the right space! While you hustle for your company's success, we stand prepared to accompany you on this journey. Access unparalleled funding possibilities with our MSME-focused business loans, aligning seamlessly with your endeavors for business growth.


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Business Loan for Women


Are you a woman entrepreneur with a vision for business growth? We are excited to fuel your ambitions with our women-centric business loans. Whether you're spearheading a small-scale business or a micro enterprise, our MSME-focused business loans are designed to meet your business needs.


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Business Loan


We give you the courage to take that next step that your business needs. Godrej Capital Business Loans empower you with customizable financing solutions to grow your business to the next level!


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Loan Terminologies

ABCs of Business Loan: Understanding Commonly Used Terminologies

Ever dreamt of expanding your business to reach new heights of success? A Business Loan in India is the most commonly used financial tool to help entrepreneurs achieve their business goals. With a business loan, an entrepreneur can acquire cutting-edge equipment, simply smooth out cash flow fluctuations, and expand operations, among others. 

A business loan can be the key to unlocking many possibilities. But navigating the world of loan applications amid difficult-to-understand financial terminology can feel like decoding a complex language.

This comprehensive glossary serves as your cheat sheet to understanding business loan terminology. We'll break down key terms into clear, concise definitions, empowering you to confidently discuss loan options with lenders. Consider it your guide to securing the right financing option for your venture and propelling your business forward.


Fundamentals of Loans for Businesses:

  1. Principal: The core amount of money borrowed, excluding interest and fees.


  2. Interest: The cost of borrowing money, expressed separately from the principal amount. The interest amount plus the principal amount constitutes the EMI payment.


  3. Interest Rate: The cost of borrowing money, expressed as a percentage of the loan principal. Interest rates can be fixed (remain constant throughout the loan term) or variable (fluctuate based on market conditions), or semi-fixed, that is remain fixed for a specified period and then fluctuate as per the market conditions. A low-interest rate means lower monthly payments and vice versa.


Also Read: Understanding Interest Rates: Fixed vs. Semi-Fixed vs. Floating


  1. EMI: EMI stands for Equated Monthly Installment. It's the fixed amount of money you pay each month to repay a loan, like a home loan or a car loan. This amount includes both the principal amount you borrowed, and the interest charged by the lender. EMI helps you spread out the repayment of your loan over a set period, making it easier to manage your finances.


  2. Loan Tenure: This refers to the loan duration, typically ranging from a few months to several years. A shorter loan term translates to higher monthly payments but allows you to be debt-free sooner. Conversely, a longer term offers lower monthly payments but spreads out the repayment over a longer period.


  3. Maturity Date: This is the critical deadline by which the entire loan amount (principal + interest) must be repaid in full. 


Example: You need an INR 5 lakh loan to purchase new inventory for your business. The lender offers you the loan at a 10% interest rate per annum and you choose to repay the loan in 60 months or 5 years. The total interest amount will be INR 1,37,440. The total EMI payment (interest + principal) = 1,37,440 + 5,00,000 = INR 6,37,440. This can be easily calculated using the EMI calculator here.


In this example, 
Principal = INR 5,00,000 
Interest = 1,37,440
Interest rate = 10%
Loan tenure = 5 years



Different Types of Business Loans:

Term Loan: A term loan is a type of business loan that is borrowed for a specific amount of money, with a fixed repayment schedule and a predetermined maturity date. The borrower receives the entire loan amount upfront and then repays the loan over a set period, typically in regular installments. Term loans are commonly used by businesses to finance long-term investments, such as purchasing equipment, expanding operations, or acquiring another business. 

Term loans are often secured by collateral, such as equipment or real estate, to provide reassurance to the lender and potentially lower the interest rate. However, term loans can also be unsecured, meaning they do not require collateral but may have higher interest rates and stricter eligibility criteria.


Line of Credit or Overdraft Facility: A line of credit or an Overdraft Facility is a type of revolving credit that allows a borrower to access funds up to a predetermined maximum amount, known as the sanctioned limit. Unlike a term loan where the borrower receives a lump sum upfront, with a line of credit, the borrower can draw funds as needed, up to the sanctioned limit. The borrower only pays interest on the amount of funds that are actually borrowed and used.

Lines of credit are often used by businesses to address short-term cash flow needs, manage seasonal fluctuations in revenue, or fund ongoing operating expenses. They can also be used for larger expenses such as business expansion, inventory purchases, or equipment upgrades. 


Also Read: Understanding Overdraft Facility: A Simple Explanation


Secured Loan: A secured business loan is a type of loan that requires the borrower to provide collateral, such as assets or property, to secure the loan. The collateral acts as a form of security for the lender in case the borrower defaults on the loan. If the borrower fails to repay the loan, the lender retains the right to seize and sell the collateral to recoup their losses. Secured business loans are often used by businesses that may not qualify for unsecured loans due to a lack of credit history, lower credit scores, or higher risk factors. By offering collateral, the borrower can reduce the lender's risk and potentially secure a lower interest rate or higher loan amount.


Unsecured Loan: An unsecured business loan is a type of loan that does not require the borrower to provide collateral or security in order to qualify for the loan. Instead, the loan is approved based on the creditworthiness and financial stability of the borrower. Unsecured business loans are typically used by small and medium-sized businesses to finance short-term expenses, such as working capital, inventory purchases, equipment upgrades, or marketing campaigns.


Also Read: Confused Between Secured and Unsecured Loans? Let us simplify this for you!


Other Terminologies – Costs, Repayments, and more:

  1. Amortization Schedule: This detailed breakdown shows how each loan payment is allocated between principal and interest over the loan term.


  2. Loan-to-Value Ratio (LTV): This ratio compares the loan amount to the value of the collateral (for secured loans). A lower LTV indicates a less risky loan for the lender and may lead to better terms for you.


  3. Basis Point: A unit used to express interest rates, equal to 1/100th of one percent. It is used to describe interest rates and origination fees.


  4. Closing Costs: Fees associated with finalizing a loan, including origination fees, title searches, and attorney fees.


  5. Debt Service: Regular payments made towards the principal and interest of a loan.


  6. Delinquent:A loan payment that is missed or past due.


  7. Demand Loan:A loan with no set repayment term, where the lender can request repayment at any time.


  8. Guarantor:An individual or entity who promises to repay the loan if the borrower defaults.


  9. Loan-to-Cost Ratio (LTC):The Loan-to-Cost (LTC) ratio is a financial metric commonly used by lenders to evaluate the risk of providing a business loan for a specific project or investment. The LTC ratio compares the amount of the loan being requested to the total cost of the project. It helps lenders determine how much of the project will be funded by debt (the loan) versus equity (the borrower's own funds).


    The formula for calculating the Loan-to-Cost ratio is:

    LTC ratio = Loan amount / Total project cost

    For example, if a borrower is requesting a loan of INR 50,00,000 to fund a project that has a total cost of INR 1,00,00,000, the Loan-to-Cost ratio would be:

    LTC ratio = INR 50,00,000 / INR 1,00,00,000 = 0.5 or 50%


  1. Origination Date: The date a loan is funded and becomes active.


  2. Prime Rate: The interest rate offered by lenders to their most creditworthy customers. This benchmark rate can influence other loan rates.


  3. Underwriting: The process lenders use to assess a loan applicant's creditworthiness and risk before approving a loan.


  4. Variable Interest Rate: An interest rate that can fluctuate over time based on an underlying benchmark rate set by Reserve Bank of India (RBI). This means your monthly loan payments may also adjust periodically. Variable rates can be attractive when they are initially lower than fixed rates but be sure to understand the potential impact of rising interest rates on your future payments.


Ready to take the next step?

Don't wait! Godrej Capital Business Loans offers a variety of financing options to suit your specific needs. Use your newfound knowledge of loan terminology to explore business loan offerings and find the perfect fit for your business. 

Godrej Capital also offers specialized Business Loans for Women and Business loans for MSMEs. Our expert loan specialists are also happy to answer any questions you may have. Contact us today to unlock the potential of your business!


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