What is Professional Loan?
Professional loan is a funding or credit option extended to professionals such as doctors, chartered accountants, architects and others, for setting up and growing their business or practice. These are specifically meant for individuals with professional qualifications, and the loans are given based on their capabilities, expertise, track record, revenues, and reputation.
|Interest Rate||Depends on applicant’s profile and business requirements|
|Nature of Loan||Term Loan, Working Capital Loan, Demand Loan, Cash Credit, Letter of Credit|
|Loan Amount||Min. Rs. 1 lakh & Max. up to Rs. 5 crore|
|Repayment Tenure||From 12 months to 7 years|
|Collateral||Only required for secured business loans|
|Fees & Charges||Varies from bank to bank|
Note: The mentioned interest rates, fees and charges are subject to change and depend on the sole discretion of the bank and RBI. GST and service tax shall be levied extra on the mentioned charges.
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Features of Professional Loans
The professional loans, without pledging collateral, usually range from Rs 50,000 to Rs 50 lakhs. With collateral, the amount can even go up to Rs 2 crore. The repayment period can vary from a year to five, depending on the amount, interest rate, and the borrower’s repayment capacity. The lending institution can also be negotiated with for alternative repayment options, with a good borrower-lender relationship being a key contributor.
Eligibility Criteria for Professional Loans
|Eligible Entities to avail of professional loan||Doctors, CAs, CSs, Advocates, Financial Consultants, Physiotherapists, Engineers, Architects, Interior Designers, Dentists, Photographers and many more entities|
|Age Criteria||Min. 25 years and Max. 65 years|
|Eligible Financial Entities||Private and Public Limited Companies, Sole Proprietorship, Partnership Firms, Limited Liability Partnerships|
|Minimum Annual Income & Turnover||Depends on lender|
|Min. work experience and business vintage||Depends on lender|
Documents for taking a professional loan are almost the same as for a KYC when opening a bank account or any other financial transaction. The lending institution will ask for the following documents in general:
- Proof of professional degree, such as the certificate from the institution
- Duly filled application form with passport-sized photographs
- Business Plan
- A copy of PAN Card of the applicant and business
- Proof of Residence (Passport, Driving License, PAN Card, Aadhaar, etc.)
- Proof of Identity (Driving License, Passport, Voter ID, Aadhaar, etc.)
- Bank statement of the past 6 months
- Income tax returns for the most recent year
- Profit and loss account and balance sheet for the past 2 years, duly audited by a chartered accountant
- Trade license, tax returns, and proof of operation of the business
- Other documents associated with the registration and practice of the business
- Any other document required by the lender
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Types of Professional Loans
The type of professional loan sought depends on many factors, such as the nature of the practice, whether the borrower is a salaried individual and the purpose. Professionals can take loans for setting up their businesses, buying or renting premises, for expanding their business, staffing requirements, acquiring working capital, attending seminars and conferences, and also to tide over short-term requirements. Below mentioned are the types of professional loans offered by financial institutions:
Loans for Doctors
Professional Loans for Doctors are offered up to Rs. 2 crore with flexible repayment options and easy EMIs. Doctor loans are approved instantly with a hassle-free loan process. Less paperwork is required for loan processing for Doctor loans.
Loans for Chartered Accountants
Loan for CAs are offered to meet their working capital requirement and for various purposes like business expansion, paying-off rent and salaries, buying equipment, managing business cash flow, etc. The loan amount offered CAs shall vary from bank to bank and depends on the applicant’s profile and business requirements.
Professional Loans for Engineers
Engineers can avail loan against property for up to Rs. 3.5 crore for IT, computer science, mechanical, civil, chemical or electronic engineers. Engineers can also avail personal finance up to Rs. 2 crores with flexible repayment options.
How to Apply for a Professional Loan?
To apply for a professional loan, applicants can visit paisabazaar.com to check and compare from all the leading financial institutions and pick the one that suits your business requirements at attractive interest rates.