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Professional Loan: Types and Features

by Anjitha

As a professional, you have the knowledge and background necessary to start your own business. But being self-employed is advantageous, yet you require money to succeed in your line of work. The professional loan might be used to pay for different purposes. This includes an advertising campaign, get new office space, boost working capital, train workers, set up state-of-the-art software, or buy equipment. Government banks frequently offer professional loans, although various commercial banks and NBFCs also offer these loans.

What is a professional loan?

For starting and expanding their business or practice, professionals including doctors, chartered accountants, architects, and others are offered professional loans as a form of finance or credit. So these loans are granted to those with professional qualifications only, and they are awarded based on their qualifications, experience, track record, income, and reputation. Hence, the interest rate of the professional loan depends on the applicant’s profile and business requirements.

Features of professional loans

Without putting up any collateral, professional loans often vary from 50,000 to 50 lakhs rupees. The amount may potentially increase to Rs 2 crore with collateral. Depending on the amount borrowed, the interest rate, and the borrower’s ability to repay the loan, the repayment time can range from one year to five. Alternative repayment arrangements may also be discussed with the lending institution, with a strong borrower-lender relationship being a critical factor. 

Eligible entities to avail of professional loans: Doctors, CAs, CSS, Advocates, Financial Consultants, Physiotherapists, Engineers, Architects, Interior Designers, Dentists, Photographers, and many other professionals are included in this category.

Eligible financial entities: Limited Liability Partnerships, Sole Proprietorships, Partnership Firms, Private and Public Limited Companies

Why do you need a professional loan?

Applying for a professional loan may be done for a variety of reasons. Here are just a few examples:

It’s possible for professionals like doctors to open their own private practice clinics. Since this would need a sizable amount of money to start, a business loan would be the best option in this situation.  

If a professional already has a facility to practice, they might want to enlarge or upgrade it. This may entail making improvements, looking for new spaces, and hiring more personnel. A professional loan can make it simple to get the money needed for this.

As a professional, it’s critical to consistently keep abreast of technical developments and business improvements in your field. Use a professional loan to refresh your professional practice by buying new machines or equipment.

Types of professional loans

The sort of professional loan requested depends on a number of variables. This includes the borrower’s salary status, the nature of the practice, and the objective. Professionals may use loans for a variety of purposes, including business startups, real estate purchases or leases, business expansion, hiring personnel, obtaining working capital, attending seminars and conferences, and meeting immediate financial needs. The following list includes the several kinds of business loans that banking institutions offer:

Loans for doctors

Up to Rs. 2 crores in professional loans are available for doctors, with flexible repayment terms and simple EMIs. With a simple loan application method, doctor loans are promptly granted. Processing professional loan for doctors involves less paperwork.

Loans for charted accountants

Professional Loan for CAs are available to help them with their working capital needs as well as for a number of other things, including business expansion, paying off debts such as rent and salaries, purchasing equipment, and controlling cash flow. The loan amount granted to CAs will vary from bank to bank and be based on the profile and business needs of the applicant. 

Loans for engineers

Engineers in the fields of information technology, computer science, mechanical, civil, chemical, or electronics can obtain a loan against property for up to Rs. 3.5 crore. Engineers are also eligible for personal loans with various repayment options up to Rs. 2 crores.


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