Personal Loan for Private Sector
If you are interested in setting up a business in the private sector, then one of the ways through which you can do is by availing a personal loan. You can avail a personal loan based on certain factors and accordingly set a business in the private sector. We will have a further look into personal loans you can avail if you wish to set your own business in the private sector.
Generally, you can avail a personal loan ranging between Rs.50,000 and Rs.15 lakh with repayment tenure ranging between 1 year and 5 years. The rate of interest levied may differ from bank to bank.
Eligibility criteria
- You must be a salaried employee working for a private, public, or a government firm.
- Minimum age of 21 years.
- Maximum age of 60 years at the time of the maturity of the personal loan.
- Minimum monthly income of Rs.15,000.
Documents required
- Application form duly filled by you
- KYC documents
- Duly signed loan agreement form and Standing Instruction (SI) Request form or ECS form
Advantages of taking a Personal Loan for your Business
Let us discuss some of the key advantages of applying for a personal loan for your business:
- A personal loan is more cost-efficient when compared to its alternative: business loan.
- Personal loans can be repaid on a monthly basis at lower rates of interest as opposed to conventional business loans.
- The minimum revenue requirement for a personal loan is much lesser compared to the requirement for a business loan.
- Personal loans are the right choice for individuals with minimal business history.
- Personal loans are good for business people who have a poor credit score.
- You do not have to give any collateral to your loan provider when you need a personal loan.
- When you take a personal loan, the bank will not interfere in your business or impose restrictions on the functioning of your business.
- The availability of personal loans is higher than business loans for new entrepreneurs in the private sector. Most banks are reluctant to give business loans to start-up companies.
- There is lesser paperwork for personal loans.
- Personal loans come with flexible repayment options.
- Personal loans can be paid in equated monthly installments.
How can a Company in the Private Sector use a Personal Loan?
Let us take a look at some of the ways a business can fund its activities with a personal loan:
- If a sole proprietor or a partnership firm wants to start a business, they can apply for a personal loan and procure it without much delay. Sole proprietorships and partnership firms generally will have a low budget during the initial period of the business. Hence, a personal loan is ideal for this kind of budget. They will incur lower costs with a personal loan.
- A personal loan is great even for a large company. The company can fund its production and marketing activities on a small or a medium scale with a personal loan.
- Companies of all sizes can finance their needs such as office property, office accessories, office furniture, and so on.
- Personal loans can be used to fund activities such as hiring and recruitment of manpower in the private sector companies.
- If an established business wants to fund its expansion projects or brand new projects, it can apply for a personal loan. A company can recreate its whole business strategy with a personal loan by planning wisely.
- When a company with lesser years of experience in the industry, is denied a business loan, a personal loan is a superb choice.
Best Banks that offer Personal Loans in India
Let us view some of the top banks that offer personal loans in India:
- Cholamandalam Finance
- Kotak Mahindra Bank
- Fullerton Bank
- HDFC Bank
- SBI
- Yes Bank
- IndusInd Bank
- Standard Chartered Bank
When you are planning to start a business or expand your business, you need to be aware of all the risks associated with it. Taking a personal loan is a brilliant less-known way to capitalise the endless requirements of your company in the private sector.
FAQs on Personal Loan for Private Sector
- Are personal loans available to private employees?
Those who fit the following criteria may apply for a personal loan: employees of private limited firms and those working for public sector organisations, such as national, state, and local governments. those who are between the ages of 21 years and 60 years.
- Does the private sector require collateral for personal loans?
No, personal loans in the private sector are unsecured, thus you are not required to offer security or collateral.
- If my credit score is below 750, am I still eligible for a personal loan?
Those applying for personal loans with credit scores of 750 or higher often have a higher probability of approval. But some banks and NBFCs may grant personal loans to individuals with credit ratings under 750. For candidates for personal loans with weaker credit scores, these lenders typically charge higher interest rates.
- My monthly take-home pay is Rs.25,000. How likely is it that my loan will be approved?
If an applicant has a monthly income of at least Rs.15,000, many lenders may consider them for personal loans. However, additional qualifying requirements, such as your credit score, occupation profile, EMI/NMI (net monthly income) ratio, employer's profile, age, etc., would also be taken into consideration while approving the loan. If an applicant's entire EMI commitment, including the EMI of the new personal loan, does not exceed 50–55% of their net monthly income, lenders would typically approve them for a personal loan.
- Although my employer is not on my bank's "approved list of companies," I am a salaried employee. Would I be offered a personal loan?
Some banks and NBFCs would not allow personal loan applications from borrowers who work for organisations that are not on their list. However, if these employees have an excellent credit history, certain lenders might approve their applications for personal loans.
- What records are needed to apply for a personal loan?
Commonly used documents include identification, financial records, and photos. Each lender may require a different set of documentation.
- How long does it take to have a personal loan approved?
Even though approval dates can differ, many lenders offer fast or same-day loan approval if you match the requirements and submit all necessary paperwork.
- How long does it take to have a personal loan approved for the private sector?
With the development of digital tools, personal loans are now handled within a few hours, and the money is deposited into your account within minutes, whilst the majority of lenders process personal loans within 24 hours.
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