What is a professional Loan?
Professional loans are loan facilities granted to working professionals like doctors, lawyers, chartered accountants, architects, etc. who are looking for funds to start their own practice or expand their trade. A lot of people often confuse a professional loan with a business loan. This confusion is obvious as there is a very fine line between the two. While business loans are generally taken up by start-ups or big enterprises looking to expand their businesses further, professional loans are often granted to borrowers with specific needs and eligibility. In simple words, these loans are often tailor-made to suit the need of a particular business’ needs. For instance, the funds required for setting up a doctor’s clinic might be different from the funds needed to set up an architectural firm. Therefore, most banks and loan-providing financial institutes take into consideration factors such as the borrower’s professional degrees, total working experience, the reason for availing funds, and other such factors while granting a professional loan.
Professional Loan Eligibility
The basic criteria for professional loan eligibility are-
The borrower must have a professional degree/diploma in his field of expertise to apply for a professional loan
The borrower can apply for this loan individually or in collaboration with a firm, partnering companies or proprietorships.
The borrower must be within the age group of 25-65 years.
The borrower must have a minimum work experience of 4-5 years
In case the borrower already has an existing practice, the minimum annual income of the business must be INR.1,000,00.
While these are just some basic eligibility criteria, it is important to note that some of these criteria may vary as per the terms and conditions of different banks or financial institutes.
The following documents are required to apply for a professional loan-
Copies of your professional degrees/diplomas
Identity Proof- PAN Card, Aadhar Card, Passport, Voter ID
Address Proof- Driving license, electricity bill, telephone bill, etc.
Bank Statements for the business (past 6 months)
Profit and Loss statement of the business
Proof of ownership/lease of a property to set up the practice
Any other documents required by the financial institute
How to Apply?
A borrower can physically visit the loan provider’s office or choose to apply for a professional loan online from the comforts of your office. However, before you initiate your loan application process, it is advised that you compare all your options online and choose a loan provider who is offering you a professional loan as per your business needs. Moreover, once you select your loan provider, it is also important that you check your eligibility for their professional loan. Once you are thorough with all these details, you can proceed with your online application process.
A typical professional loan online application process requires the following steps-
Step 1: Open the professional loan application page on your bank/loan provider’s website
Step 2: Fill up the online form with your personal as well as professional details
Step 3: Specify your loan details as per your professional business needs
Step 4: Get your loan application assessed by the loan provider and get it approved
Step 5: Once approved, the loan amount will get disbursed in your account within 24 hours.
Why Apply For A Professional Loan?
Applying for a professional loan offers the following benefits-
Instant loan approval and quick amount disbursal that makes establishing your business faster
Competitive interest rates and flexible repayment options
Easy online process
Less documentation required as compared to other loan application processes
Option of prepayments.
Things to Consider before Applying for a Professional Loan
Check your requirements
A professional loan for doctors will have a different financial requirement as compared to a professional loan for chartered accountant. Therefore, it is better to assess your entire professional loan financial requirement before approaching any loan provider.
Compare your rate of interest
Different loan providers offer different interest rates on their professional loans. Hence, before choosing your loan provider it is advisable to compare all your options in the market and make an informed decision about your professional loan.
Watch out for any hidden charges
Most loan providers are transparent about their loan processing fees and other charges involved. However, just to be sure, comb through the terms and condition of your loan agreement to see whether there are any hidden charges involved. If you overlook any of these hidden charges at the time of signing your loan agreement, you might have to face some financial strain in paying them later on, during your loan repayment tenure.
Check for the loan provider’s credibility:
It is important to check your bank or loan provider’s credibility before availing any professional loan with them. This would ensure that you do not face any legal liabilities or financial hassles during your loan tenure.