Loans are needed by most of the salaried or self-employed persons at one point in time or the other. There is a plethora of the kinds of loans available today -- personal loans, car loans, housing loans, etc. The list keeps going. Let's take a look at one category of loans provided by banks -- loans for professionals.
This is not specifically a category of loan but a category of the documents required to get a loan. There are several conditions that need to be fulfilled while taking a loan. One of these is the kind of documentation you have to complete or submit to the bank before the loan is approved.
There are two categories here -- documents for salaried professionals and documents for self-employed professionals.
People like doctors, chartered accountants, interior decorators, architects, company secretaries, etc fall in the category of self-employed professionals. Listed below are the different categories of documents that a self-employed professional has to fulfil.
Unlike an individual who is salaried and gets a Form 16 from the employer at the end of the year, a self-employed person seeking a personal loan does not get such income proof. Therefore, the documents that a self-employed professional can submit for fulfilling this kind of a category are the profit and loss account and balance sheet.
These are the basic documents that will give an idea about the overall situation of the person's business.
Apart from the financial information, the individual also needs to supply the necessary tax information. This will act as the back-up for the other financial information that has been presented earlier. This has to be provided in the form of income tax returns of the past two/three years and/or the computation of income certified by a chartered accountant as this will confirm that the necessary earnings are present for the individual.
This confirmation, in addition to the other documents of the business, will complete the financial aspect of the overall requirements.
Banks that give personal loans provide a benefit for the individual in the form of a loan without any security. There are several conditions under which a favourable treatment is available but often people miss out on them. One of them is the seniority in the profession.
Many banks provide better facilities to a person who is senior in the profession and it is vital that the individual furnishes the details that will show his/her standing in the industry and the time spent in the profession. So, apart from the qualification proof that is provided in the form of certificates, there should also be a business continuity proof.
This can result in a benefit in either of the two areas where the limit for the loan is actually increased or where other conditions are relaxed. This makes the servicing of the loan easier for the person. All these conditions taken together can ensure that the necessary documentation is complete for a self-employed person and the personal loan is made available.
Here is a list of documents that a self-employed professional may need to furnish:
- Proof of identity (passport copy / voters ID card / driving license).
- Address Proof (ration card / telephone / electricity bill / passport )
- Bank statements (latest 6 months bank statement / passbook)
- Latest ITR along with computation of income, balance sheet and profit & loss account for the last 2 years certified by a chartered accountant.
- Qualification proof of the highest professional degree
- Proof of continuation (Trade license / establishment / sales tax certificate)
- Other mandatory documents (sole proprietorship declaration or certified copy of partnership deed, certified copy of MOA, AOA & board resolution.)
The maximum amount offered as professional loans varies in banks, depending on the financial standing of the customer, his repayment capacity, tenure of the loan, et cetera. Banks generally provide loan from Rs 25,000 to Rs 25 lakh (Rs 2.5 million). The interest rates vary only slightly from the normal lending rates of the banks.