We all need a personal loan at some time or another in our lives. You might want some extra money for a wedding in the family, a holiday trip, a medical need, or an office premise upgrade. Personal loan is the easiest way to get that extra money, if you do not have excess savings or friends and family you can borrow from.
One often finds that the salaried class gets personal loans easily, while businesspersons may have to struggle a bit to get a personal loan. When banks give out loans, they want to ensure that the person they are lending to can repay the amount. Salaried persons, because of their secure monthly income fit this requirement perfectly. However, this does not mean that banks and Non-Banking Financial Companies (NBFCs) would refuse to give personal loans to businesspersons. Any businessman wishing to take a loan can look for loan products that cater to self-employed persons.
For businesspersons to get personal loans, they would need to meet the following criteria:
Let us look at some banks that give personal loans to businesspersons.
With Citibank, businesspersons can get personal loans of up to Rs.30 lakh, depending on the annual income and strength of the business. Repayment can be made in 1 to 5 years. You get approval and loan disbursal within 2 working days of applying for the loan. A booking fee or processing fee of up to 2.5% of the loan amount would be charged, and the interest rate as on 6th January, 2017, is 18.99% to 19.99% for loans of Rs.80,000 or less, and 15.99% to 18.99% for loans of more than Rs.80,000.
Tata Capital offers personal loans to businesspersons who are 25 to 65 years old, and earn at least Rs.2 lakh in a year. The minimum loan amount is Rs.75,000 and the maximum amount is Rs.15 lakh. The loan can be repaid in 1 to 4 years. You can apply for a loan online and the application will be approved and processed promptly.
Fullerton India gives personal loans keeping in mind customisation and flexibility. You can borrow up to Rs.30 lakh if you are engaged in a business. The loan amount will depend on your income and repayment capacity. The loan tenure is between 1 to 4 years, and repayment can be made on a fixed monthly EMI basis.
One of the things you need to be wary about is the pre-payment fees charged by the financial companies if you want to either close your loan before the end of the tenure or if you want to make partial payments to reduce your loan liability. Foreclosure charges range from 2% of the outstanding amount to 4%, depending on how much of the loan tenure has been completed already.
Some banks may offer loans only to self-employed professionals and not to self-employed non-professionals. Professionals are defined as persons who are engaged in a professional service, such as doctors, lawyers, chartered accountants, architects, business consultants, accountants, and freelancers. Before you apply for a loan, check with the bank officials whether the bank gives loans to self-employed businesspersons who are not professionals.