Professional Loan: What it is, who can opt for it – Here’s all you need to know

Professional loans are unsecured loans given to professionals such as Chartered Accountants, Company Secretaries and Doctors, who provide professional services by charging a specific fee. Experts say these loans are designed for the purpose of expansion, up-gradation or for any other professional requirements that may arise.

Manish Chaudhari, Head – Digital and Corporate Alliance, Poonawalla Fincorp, says, “Professional loans are extended to certified professionals such as doctors, chartered accountants and company secretaries. However, lenders check the eligibility and other credentials as part of one’s background check process before extending a loan to any individual.”

Professional loans are unsecured loans wherein the borrower does not have to pledge any collateral with the lender while taking a loan.

How is it different from a personal loan?

Personal loans unlike professional loans are given to individuals who require money to fulfil any personal needs such as vacations, wedding expenses, home renovation and sometimes for any medical exigencies. Industry experts say personal loans comparatively can be opted by anyone such as an individual who are either salaried employees working in any organization or by self-employed individuals who have their own business and need money to cater to personal needs.

Chaudhari says, “The key benefit of a professional loan is the fact that it does not require any collateral with the lender as security. Additionally, such a product can be availed completely digitally without the need to physically visit the branches of the lender.”

The interest rate for professional loans usually ranges from 9.99 per cent to 12 per cent, depending on respective lenders. “An important point to keep in mind is the loan limit which can be availed under professional loans,” adds Chaudhari.

Is it ideal to take a professional loan?

“Professionals just like any other hard-working individuals aspire for growth in their profession. The capital requirements are needed for various reasons such as the expansion of their office, renovation, additional staffing, purchasing new equipment for enhancing professional efficiencies, etc,” says Chaudhari.

He further adds, “In the past, such loans required them (professionals) to attach certain physical/tangible assets which are of monetary value with the lender/financial institution to avail loans for their requirements.”

Attractive lower interest rates, flexible loan tenure, low processing fees and a completely digitally-enabled platform make these types of loans an ideal tool for ensuring seamless and quick channels towards enabling the growth of a professional.