Lease Rental Discounting Process
Lease Rental Discounting (LRD) is a secured loan facility offered against rental income from leased or rented properties. In simple terms, you can access the capital by pledging future rent receivables as security, making it an effective way to access the value of commercial or residential property already generating income.
Let’s understand here with Mr. Jacob’s case study, who is looking for business expansion. And how we at Terkar Capital worked on his assignment with the LRD funding instrument.
LRD Loan Case Study
Mr. Jacod has been with a proprietary firm for the last 20 years. Jacob recently gave his premises on lease for 5 years to the vast and renowned cotton clothing brand. His turnover for the previous year is Rs. 1.4 Cr. As his business is growing, the resources of proprietary concern are short for him, and he needs funds for expansion. He decides to convert his proprietary concern into a Private company that will make huge profits. Jacob thinks about which sources the funds will be managed. Having no collateral, it was difficult for him to get funding.
The LRD Execution Process for Jacob
Jacob had all the ideas ready for expanding the business, but what hampered him was his issue with funds. He consulted many people and the financial institution, but to no avail! Everyone was asking for collateral for loans. While going through the Internet, he came across Terkar Capital. And visited our website. He soon contacted our team, and the meeting was immediately fixed.
Jacob was worried about his problems with funds and started telling us his requirements. Our team understood his needs and asked him about the financials. After analyzing all the documents and areas of his business, we realized a strong point that Jacob owns premises that he has given on lease for 5 years. Our team studied the areas related to property and concluded that Mr. Jacob can go for a lease rental discounting. We consulted with him accordingly, as the tenant or lessee was also a renowned brand in clothing.
Next, we undertook the valuation of the property and rental receipts and concluded that Lease Rental Discounting would best suit the client according to his financials. The proposal went to the lending institution for sanction, and soon the funds were released to the borrower.
We carried out the process smoothly, and the funds were received by Jacob, which solved his issue for expansion. The ROI given was also reasonable.
Financial Snapshot
Nature of Business | Proprietary concern |
Turnover of last year | Rs. 1.4 Cr |
Mortgage Available | Rented/Leased property |
Valuation of Property(Market Value) | Rs. 12 Crores |
Rental Receipts of 5 years (Lease Receipts) | Rs. 60,00,000 |
Need for funds | Business Expansion |
LRD Loan Process at Terkar Capital
At Terkar Capital, a trusted financial institution, we specialize in facilitating Lease Rental Discounting (LRD) funding for businesses seeking liquidity without selling their assets. Here is the case study of Mr. Jacob, an entrepreneur who faced challenges in raising capital for business expansion due to limited collateral. Hence, after analyzing his position, LRD was the right-fit instrument.
This case highlights how Lease Rental Discounting (LRD) serves as a practical financial solution for business owners looking to unlock their property’s earning potential while maintaining ownership.
