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  • Professional Loans

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  • Professional loans can be taken by journalists, dentists, accountants, engineers, architects, solicitors, and other such professionals who are practicing their trades. Professional loans are available with interest rates that vary between 9.90% and 16% p.a. The loan amount can go up to Rs.500 lakh and the repayment tenure is usually between 12 months and 96 months. 

    Bank Interest Rate Loan Amount Loan Tenure
    HDFC Bank 12.50% p.a. to 15.65% p.a. Up to Rs.50 lakh 12 months to 60 months
    Bank of Baroda 10% p.a. onwards Rs.10 lakh to Rs.5 crore Up to 84 months
    Federal Bank 12.9% p.a. to 14.4% p.a. Up to Rs.2 crore Up to 84 months
    IndusInd Bank 9.90% p.a. onwards Rs.5 lakh to Rs.35 lakh 12 months to 48 months
    Bajaj Finserv 14% p.a. onwards Up to Rs.35 lakh 12 months to 96 months
    Fullerton India 13% p.a. to 16% p.a. Up to Rs.50 lakh 12 months onwards
    Corporation Bank 10.90% p.a. onwards Up to Rs.500 lakh Up to 84 months

    These loans can be availed for requirements pertaining to their businesses such as purchase of equipment, construction, business premises, renovating premises, working capital, among others. These loans are meant to help a self-employed professional increase or improve their business and overcome liquidity crunch when buying equipment or investing in their own business. Read on for a comparison of a few professional loans that are offered by some of the top banks in the country.

    HDFC Bank

    Benefits/Key Highlights:
    • Chartered accountants, doctors, company secretaries, architects, and other professionals who consult or have their own practice can apply for HDFC Bank’s Loans for Professionals.
    • Borrowers should be over the age of 25 years when applying for this loan.
    • The bank offers an insurance cover against natural death/accidental death and the Credit Protect Insurance Plan, which borrowers can avail by paying a nominal premium.
    • Individuals who avail this loan can get tax benefits.
    • You can check your eligibility for this loan in just 60 seconds.
    Processing Fee EMI (for Rs.5 lakh) Repayment Pre-Closure Charges
    Up to 2.5% of the borrowed loan amount, subject to a minimum of Rs.2,359 and a maximum of Rs.88,500 Rs.17,089 Rs.6,15,197
    • 07-24 Months - 4% of the outstanding principal
    • 25-36 Months - 3% of the outstanding principal
    • >36 Months - 2% of the outstanding principal

    *Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 14% p.a.

    Penalties/Internal Charges

    • Charges for delayed EMI payment: 2% per month on the EMI amount
    • Stamp duty and other statutory charges: As per the laws of the state
    • Cheque swapping charges: Rs.500
    • Amortisation schedule charges: Rs.200
    • Cheque bounce charges: Rs.550
    • Legal charges: At actuals

    Bank of Baroda

    Benefits/Key Highlights:
    • The Baroda Professionals loan can be availed by professionals like engineers, doctors, architects, interior designers, financial consultants, photographers, dentists, advocates, and other qualified service providers.
    • Partnerships, companies, and proprietorships can also apply for this loan.
    • Loans can be availed to finance working capital requirements, to purchase new equipment, and to renovate or expand one’s business.
    • Professionals can apply for this loan in a simple and hassle-free manner.
    Processing Fee EMI (for Rs.5 lakh) Repayment Pre-Closure Charges
    As per the bank’s terms and conditions Rs.33,214 Rs.11,95,715 As per the bank’s terms and conditions

    *Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.10 lakh has been availed for a 3-year term at an interest of 12% p.a.

    Federal Bank

    Benefits/Key Highlights:
    • Architects, chartered accountants, and doctors can apply for this loan, provided that they have a minimum experience of 4 years.
    • The bank offers an easy repayment facility.
    • Federal Bank assesses your loan application and approves it in a timely manner.
    • The loan can be availed for a number of purposes including to take over loans and for reimbursement.
    Processing Fee EMI (for Rs.5 lakh) Repayment Pre-Closure Charges
    As per the bank’s terms and conditions Rs.16,847 Rs.6,06,491 As per the bank’s terms and conditions

    *Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 13% p.a.

    IndusInd Bank

    Benefits/Key Highlights:
    • IndusInd Bank’s Professional Loans to Doctors is a collateral-free loan that can be availed by doctors if they require funds to upgrade equipment, expand their businesses, set up a clinic, etc.
    • The bank offers a speedy loan disbursal process, with flexible loan repayment schedules.
    • Minimum documentation is required to avail this loan.
    • The bank offers door-step service.
    • To avail this loan, the applicant has to be over the age of 25 years.
    • Family income can be clubbed to increase eligibility.
    Processing Fee EMI (for Rs.5 lakh) Repayment Pre-Closure Charges
    As per the bank’s terms and conditions Rs.17,089 Rs.6,15,197 As per the bank’s terms and conditions

    *Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 14% p.a.

    Bajaj Finserv

    Benefits/Key Highlights
    • Bajaj Finserv offers three types of professional loans – Business Loan for Doctors, Business Loan for Chartered Accountants, and Finance for Engineers.
    • The Business Loan for Doctors allows eligible applicants to apply for a loan amount of up to Rs.30 lakh. A repayment tenure of up to 96 months can be opted for by the borrower.
    • Chartered accountants who are in need of funds to finance business requirements can opt for the Business Loan for Chartered Accountants. A maximum loan tenure of up to Rs.35 lakh can be chosen. Applicants can opt for a loan tenure between 12 months and 60 months when applying for this loan.
    • Bajaj Finserv also offers a loan for engineers. Salaried engineers can opt for the Personal Loan for Engineers, while self-employed engineers can opt for the Business Loan for Engineers.
    • In addition to these loans, Bajaj Finserv also offers a home loan, personal loan, and loan against property for both doctors and chartered accountants.
    Processing Fee EMI (for Rs.5 lakh) Repayment Pre-Closure Charges
    Up to 2% of the loan amount Rs.17,579 Rs.6,32,827 As per the bank’s terms and conditions

    *Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 16% p.a.

    Penalties/Internal Charges:

    • Penal interest: 2% per month plus applicable taxes
    • Bounce charges: Up to Rs.3,000 per bounce
    • Document processing charges: Rs.1,449 plus taxes
    • Foreclosure charges: 4% of the loan amount plus taxes
    • Part-prepayment charges: 2% plus applicable taxes

    Fullerton India

    Benefits/Key Highlights:
    • Fullerton India offers two business loans for professionals – Business Loan for Doctors and Business Loan for Chartered Accountants.
    • Doctors who are in need of funds to hire additional staff, buy medical equipment, etc., can avail Fullerton India’s Business Loan for Doctors. Applicants can avail a loan amount of up to Rs.35 lakh.
    • The Business Loan For Chartered Accountants is designed to help chartered accountants finance their business requirements. The banks offers loans up to Rs.50 lakh.
    • In addition, Fullerton India also offers a personal loan for doctors. Doctors can borrow up to Rs.20 lakh, and choose a loan repayment tenure between 24 months and 60 months.
    Processing Fee EMI (for Rs.5 lakh) Repayment Pre-Closure Charges
    Up to 6.5% of the loan amount Rs.17,089 Rs.6,15,197 As per the bank’s terms and conditions

    Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 3-year term at an interest of 14% p.a.

    Penalties/Internal Charges:

    • Collection of cash or cheque: Rs.300
    • ECS/cheque dishonour charges: Rs.30
    • Swap charges: Rs.500
    • Loan cancellation charges (for loans that are cancelled before payment of the first EMI): Rs.1,000
    • Foreclosure charges: Up to 4% (up to 7% for the personal loan for doctors)

    Corporation Bank

    Benefits/Key Highlights:
    • Corporation Bank offers two types of professional loans – Corp Doctor Plus Scheme (loan for doctors) and Corp Professional Scheme (loan for professionals).
    • The Corp Doctor Plus Scheme can be availed by any registered physiotherapist or medical practitioner who is over the age of 25 years.
    • The Corp Professional Scheme can be availed by professionals on an individual or joint basis and partnership firms or companies. Individuals who apply for this loan are required to be over the age of 25 years.
    • Those availing the Corp Doctor Plus Scheme can borrow a maximum loan of Rs.5 crore. Those applying for the Corp Professional Scheme can apply for a maximum loan amount of Rs.500 lakh.
    Processing Fee EMI (for Rs.5 lakh) Repayment Pre-Closure Charges
    Up to 0.75% of the loan amount Rs.44,424 Rs.5,33,093 Nil

    *Note: For the EMI and repayment calculation, it is assumed that a loan amount of Rs.5 lakh has been availed for a 1-year term at an interest of 12% p.a.

    Eligibility Criteria

    The eligibility criteria for professional loans are as follows:

    • Professionals can include people having a diploma/degree who are sufficiently qualified or possess the skills to practice specialised professions such as lawyers, journalists, engineers, chartered accountants, software engineers, management consultants, doctors, etc., can apply for this loan.
    • Individuals, partnership companies and firms, and proprietorships can apply for this type of loan.
    • Applicants between the ages of 25 years and 65 years can apply for professional loans.
    • A minimum work experience of either 4 years or 5 years may be required.
    • The business run by the loan applicant should have a minimum annual income of around Rs.1 lakh.
    • The business should have been making a profit for the last 2 years.

    *Note: banks may have varied specifications and conditions regarding their respective eligibility criteria for loans.

    Documents Required

    banks who offer professional loans typically ask for minimal documentation. The following documents will usually have to be submitted when applying for a professional loan:

    • Proof of qualification of your highest professional degree
    • PAN card
    • ID proof
    • Address proof
    • Bank statement of the last 6 months
    • Latest ITR with balance sheet, computation of income, and the profit and loss statement of the last 2 years
    • Certificate of Practice (COP)
    • Proof of ownership of at least one property
    • Proof of continuation
    • Any other documents that are required

    Features and Benefits

    Each bank offers its own set of benefits and features, however the outlook for the offerings is more or less the same for all banks.

    • Maximum repayment tenure is generally 60 months, though some banks also offer 84 months or more repayment period to customers. This tenure includes/excludes up to 6 months moratorium.
    • A minimal prepayment penalty is charged on professional loans
    • Quick loan approval and disbursal
    • Attractive interest rates and repayment tenures
    • Easy and simple application process

    Things to Consider When Applying for a Professional Loan

    Here are a few things that you should take into account before applying for a professional loan:

    • Assess Your Requirements: You should first assess your financial requirements and work out how much you would like to borrow from the bank. Once you know how much you need to borrow, you should check the minimum and maximum loan amount offered by different banks, and opt for a loan that meets your financial requirements.
    • Check the bank’s Eligibility Criteria: The eligibility criteria for professional loans vary from bank to bank. Your application will not be approved unless you meet the eligibility criteria specified by the bank. Thus, you should ensure that you meet the eligibility criteria before applying for the loan.
    • Compare the Interest Rates: Most banks charge an interest of over 10% p.a. for professional loans. Given that it can affect the cost of your loan significantly, you should ensure that you compare the interest rates charged by different banks.
    • Check the Other Charges Levied: Banks and financial institutions levy charges like the processing fee, pre-closure fee, part-payment fee, documentation charges, late payment fee, etc. It is best to be well aware of all the charges that are levied before you avail a loan.
    • Check the Terms and Conditions: Make sure to read the fine print so you are familiar with the bank’s terms and conditions regarding the loan. This will ensure that you don’t face any hassles during the loan tenure.
    • Compare Your Options: Given that there are multiple banks who offer professional loans, you should, ideally, compare the various options that are available for professional loans in India. Make sure to do your comparison and opt for a loan that has the best terms and meets your requirements.

    How to Apply for a Professional Loan?

    A number of banks and financial institutions allow applicants to apply for professional loans online. To do this, you will need to visit the bank’s official website and click on the loan that you wish to avail, which in this case will be professional loans. Before applying for the loan, it is advisable to check your eligibility and calculate the monthly payable EMI for the loan. banks will usually offer an eligibility calculator and EMI calculator on their websites.

    Post this, you can proceed to apply for the loan. You will need to click on the ‘Apply Now’ option, which you will find on the webpage. Doing this will redirect you to another webpage with an online application form. Here, you will enter certain details about yourself and your business such as your name, contact details, age, your work experience, net annual profit, etc. Key in these details and submit the online application form. You will then receive a call/SMS from the bank’s representatives, who will guide you with the loan application process.

    Those who are not comfortable applying for a professional loan online can also choose to do their research online and visit a branch to apply for the loan. You will need to submit the loan application form at the branch and also submit the documents that are required by the bank.

    The bank will then verify your loan application and documents and approve your application. Once the loan application gets approved, the loan amount will be disbursed into your account within the timeline specified by the bank.

    FAQs

    1. What are the purposes covered under financing through professional loans?

    Loans can be sanctioned for purposes such as financing new equipment purchases, construction of new premises or renovation of old premises, working capital needs, business-related travel expenses, honing skills through expansion, etc. The basic premise for sanctioning professional loans is that the borrower should be able to justify the loan with respect to his/her trade and direct implications of the loan amount on his/her profession.

    2. Is there a cap on the amount of the loan I can avail?

    Most banks will have a maximum limit of professional loan amount. This amount varies from bank to bank, with the actual amount decided as per the repayment capacity, disposable income, and requirement.

    3. Will the end use of the loan amount be monitored by the bank?

    Yes, some banks may ask you to explain how the loan amount is being used.

    4. What is the repayment tenure for professional loans?

    In general, a professional loan has to be repaid within 5 years of approval and disbursement for fixed rate loans. Floating rate professional loans generally have a repayment tenure of 7 years.

    5. How will the loan amount be disbursed?

    The loan amount is credited into your savings bank account, unless otherwise specified.

    6. Is this a secured or unsecured personal loan?

    Most professional loans are unsecure in nature. Thus, you don’t have to submit collateral or security to avail this loan.

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