What is a Professional Loan? Types, Features and all that you need to know
A professional loan is intended for those who are self-employed. It is available to self-employed professionals such as lawyers, doctors, chartered accountants, etc.
Customers can get professional loans from various banks in India. Before taking a professional loan, you must compare the loan amount and interest rate. You should also be aware of the repayment term before choosing a loan that meets your requirements.
What is Professional Loan?
In contrast to most ordinary businessmen, professionals such as Chartered Accountants, Company Secretaries, and Doctors tend to function. But, these professionals also have differences in their individual financial needs. For instance, an accountant or a company secretary will have different financial requirements than a doctor.
Unlike a Doctor, who might must a significant amount of money to start their professional career. A Chartered Accountant will need much smaller money to begin their professional career. It is necessary to separate professional loans from personal loans. As they cater to each profession’s financial needs.
Most professional loans are to the particular needs of the individual who takes out the loan. Thus, there is a certain degree of difference between personal and business loans.
A company generally offers a business loan to expand its business. In contrast, a professional loan would meet a professional’s needs and eligibility requirements. If, for example, a company wanted to enter a new market, the amount of money needed would be different from what a company secretary required.
Types of Professional Loan
Professional loans can be categorized into five main types, which are as follows:
Chartered Accountant Professional Loan
A Chartered Accountant seeks professional loans for a variety of purposes. Including hiring new employees, renting office space, buying office furniture, and any other personal needs the accountant may have.
Doctors’ Professional Loan
During their professional careers, doctors take out professional loans for various reasons. Such as acquiring advanced medical equipment, enrolling in advanced medical courses, or paying off large loans.
Lawyers’ professional Loan
As a lawyer, your income isn’t guaranteed when starting. As a result, a lawyer can rent space for their office or hire staff by taking out a professional loan.
Engineers’ Professional Loan
Engineers can use professional loans to create their engineering firms or for any other personal purposes, they may have.
Consultants’ Professional Loan
To establish a consulting practice, consultants may need a professional loan. As their clients must have a credit cycle for their services. It will be helpful for them to manage their cash flow.
Features of Professional Loan
- A professional loan can be extended for up to five years.
- There is no universally accepted definition of a mandatory requirement for any mortgage or collateral. However, a few banks may ask for it to process the transaction.
- There are several advantages to getting a business loan, one of which is that they are flexible compared to other types of loans. A post-dated check, an EMI facility, or even an ESC mandate can be used to repay the amount borrowed in case of late payment.
- The benefit of such a loan is that it can provide relief from paying for the charges associated with business travel, including accommodation costs, air travel, and other associated expenses.
- An individual with a professional loan could use it for various purposes, including purchasing office equipment, hiring employees, renting an office, etc.
- Depending on the individual’s profession or business practice, the bank will determine the principal amount and the interest rate charged to the individual.
Importance of Professional Loan
The need for a professional loan can be attributed to various reasons. Among them are a few that have been listed below for your convenience:
- Doctors may be interested in setting up a private clinical practice to improve their income. If you want to set up one of these businesses, you will require considerable capital. Therefore, a professional loan would be the ideal solution in such a situation.
- A professional might already have a practice location, but they might want to expand or upscale it to improve its efficiency. As part of this process, renovations can be carried out, new places can be sought, and additional employees can be hired. By using a professional loan, you can quickly access the funds required for each expense.
- A solid understanding of the technological advancements and progress in your industry is crucial to staying on top of your game as a professional. To keep your professional practice up to date, an experienced loan can allow you to purchase new equipment or machinery of such type.
Is it reasonable to apply for a Professional Loan?
Like any other hard-working individual, professionals aspire to grow in their careers, just as any other hard-working individual would. As a result of the organization’s capital requirements, they can expand their office space, renovate, hire additional staff, purchase new equipment to enhance their professional efficiency, and make other improvements when required.
Lending institutions/lenders would have required borrowers to attach certain tangible or physical items with monetary value to the lender/financial institution to obtain loans for their needs as required.
Professional loans are loans extended to certified professionals such as doctors, chartered accountants, and company secretaries who frequently need funds. Despite this, lenders regularly perform background checks on many potential borrowers before extending any loan to them and verifying their eligibility and other credentials required in it.
The low-interest rates, the flexible loan tenure, the standard processing fee, and a technology platform that supports seamless and quick communication make these types of loans ideal for ensuring smooth and fast channels towards enabling a professional to grow with it.
Piramal Finance’s many strengths are its rapid and smooth application process, maximum borrowing limit depending on eligibility, and prompt disbursement of the borrowed funds. Therefore, getting your professional journey started as soon as possible is essential.
Also Read: Know different types of unsecured loans and how they work
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