Lease Rental Discounting (LRD) is offered only by select financial institutions against residential and commercial properties. The loan eligibility is calculated on basis of a certain percentage of rental income (net of applicable taxes).
In most of the financial institutions it is mandatory to have the lessor/tenant rated by a leading rating agency. The period of loan is dependant on the tenor of the lease and extends to a maximum of 9 years. Repayment of loan is from an escrow account wherein the rentals are received.
Who is eligible for the Lease Rental Discounting loan?
The product is designed to finance the business needs of:
- Sole proprietors/proprietorship firms
- Partnership firms
- Private-limited and public-limited companies
- Professionals – doctors, architects, chartered accountants, business consultants
What do I need to give as security?
- Rent receipts are payable by the tenant directly to an escrow account. The underlying tenanted property, which may be commercial property or quasi-commercial property, will be taken as collateral. No plot, self-construction or under-construction properties are allowed by some banks.
What are the basic documents required for applying for the facility?
- Lease agreement
- Bank statements for the last 6 months
- 2-year financials including Profit & Loss (P&L) statement, balance sheet and income tax returns
- Documents related to establishment of entity, identity and address proof documents.
- Property title documents
- For more specific details you can contact our Relationship Manager