Professional Loan Interest Rates

Ever heard of a professional loan? Read on to know more!

Professional Loan 101:

A professional loan, as the name suggests, is a loan that can be taken out by professionals like accountants, doctors, journalists, engineers, dentists, company secretaries, surveyors, lawyers, architects, management consultants and professionals involved in consultancy. Professionals applying for a professional loan must be qualified and must possess the proper skillset required to practice their trades. It is similar to a personal loan in the sense that it is generally a no-collateral loan. Note that some lenders might have collateral requirement, so it is better to check with your lender beforehand.

Reasons to take out a Professional Loan

A professional loan can be availed for requirements pertaining to business requirements such as purchase of equipment, business expansion, construction of business premises, renovating business premises, cash for working capital, amongst other business requirements. This loan can also be availed to finance work-related foreign trips, seminars and conferences. The loan is designed such that it helps the self-employed professional overcome a liquidity crunch in times of need and avoid dipping into their savings.
Government banks, private banks as well as NBFCs offer professional loans.

Professional Loan eligibility criteria in India:

The eligibility criteria for professional loans is simple, and similar to the eligibility criteria for personal loans. Those looking for a professional loan must be:

•    The applicant needs to be a professional – Accountant, Dentist, Doctor, Engineer, Surveyor, Architect, etc.

•    Must be practicing their trade successfully for at least 2 years

•    Must be a licensed self-employed professional—must possess licenses issued by state or central bodies.

•    Should be ideally within 21 to 65 years old. The age criteria differs from lender to lender.

Professional Loan – Documents Required:

The general documents required are KYC documents and documents pertaining to your profession.  Following is an overview:

•    Educational degree documents: Qualification proof of the highest professional degree.

•    PAN Card – For Company /Firm/ individual.

•    KYC documents – Aadhaar Card/Passport/Voters ID card/driving license/Pan Card.

•    Residence Proof – Aadhaar Card/Passport/Voters ID Card/Driving License

•    Last 6 months Bank Statement

•    Latest ITR along with computation of income, Balance sheet and Profit & Loss a/c for the last 2 years. Duly attested by a CA.

•    Proof of continuation of business (ITR / Trade license / Establishment / Sales Tax certificate)

•    Other documents as mandated by the lender.

Professional Loan Interest Rates in India:

The interest rates on a professional loan could range in-between 11.50% to 20% p.a. or even more, depending on both your individual and business credit history, annual turnover, number of years in operation, revenue, profits and of course, the lender's polices among several other factors.