Self Employed? Here Is How You Can Get a Personal Loan?

A personal loan for businessmen can prove to be a good solution when your business faces challenges like a financial crunch and more. However, when it comes to a self employed person applying for such a loan, certain additional aspects do have to be kept in mind.

Personal Loan For Self Employed Professionals

This is because, many conventional creditors are still apprehensive about lending a large sum of money to the self employed individuals in case they have a slightly unconventional business idea or choose to run a business which would only have seasonal demand. Chalking out a good repayment plan would go a long way in securing the personal loan for self employed.

While most jump at the opportunity of getting an easy credit card loan, for a self employed person- (who could be a doctor, an engineer or an artist ) who might need the funds to upgrade his clinic or his office- it would be a more prudent and steady to approach a bank or NBFC. The reason is that proper documentation is required for the purpose, which makes the process more transparent and also often more secure, as proper KYC documents have to be handed in.
In case of loans for self employed person, one might approach a lender even if there has been no pre- existing working relationship with him. However, in other kinds of loans, as in credit card loans, one can only apply for the loan if they have a credit card in the first place. So a self employed who might not have a credit card would not be able to avail this kind of a loan, even if he finds this to be an attractive option.
On the other hand, for credit card loan, the loan amount is not much. If the credit card limit on a card is Rs 1 lakh out which 25, 000 has already been spent, then one can avail a loan only on the remaining 75,000. For a self employed, who wants to start out on his own and chart a new territory for himself and set up a new office and buy its equipment, the requirement can be much more. Personal loan for self employed usually have a range of Rs 50,000 to Rs 15 lakhs, and sometimes even more, which is good enough to cover most of their requirements.

The interest rate of business loans is mostly in the range of 11 percent and 24% while in the case of credit cards, it is mostly between 12% to 18%. One should rule in other factors like total tenure, income rates, interest paid on insurance and such to determine which loan they should finally avail. The tenure for personal loans, for example, depends on the banks and creditors but in case of credit cards, some are as low as three months.
There are differences in Processing Charges of the loans as well. This can range anywhere between 0 to 2.50 percent of the total loan amount. Depending on the amount of the loan, this fee might be big enough to make a significant difference. There are also times when one might be tempted by some private banks with schemes like no processing fee, but there might be hidden charges which one might be wary of.

Approach a financial adviser, if as a self employed, you are in need of a hefty sum as a loan. Bajaj Finserv has some great schemes for personal loans for self employed business and very competitive interest rates.