When it comes to a CA applying for a business loan, it only means one thing- that the loan would go towards establishing or expanding one’s own CA firm. Setting up one’s own firm is one of the surest ways to succeed and there are many banks and NBFCs which offer business loan for Chartered Accountants, Bajaj Finserv being one of them. The highest threshold for such loans is Rs 35 lakhs and they are without any collateral. If the CA meets all the points of the eligibility criteria and if all the documents are in place, then the loan could get approved in as less as 24 hours. The amount can then be used for renting or constructing new office space, upgrade the existing office through digitalization or even recruit new employees. Hence, there are a few things to be kept in mind to avoid a rejection:
- Repayment Options: First and foremost, it is advisable to use the online business loan EMI calculator for CAs and check whether one has enough to make the payments on the loan. The calculator will ask for some information like the expected loan tenure, the loan principal amount, monthly income and additional sources of income and average expenses. Based on these factors, it will show an amount and a CA should be able to manage his finances in such a manner so that he is able to keep aside that amount for repayment.
- Credit score: Business loans for Chartered Accountants are unsecured loans and there is no collateral required for the loan and nor is the presence of a guarantor required. The only way for the creditor to know that they are funding someone who will pay back the loan on time and is safe enough to lend out to, is through their credit score. Hence, maintaining a good credit score is a must and that would go a long way to convince the creditors. Make sure there are no missed credit card payments or default on bills and the credit score should be fine.
- Valid documentation: Documents required for CA loan at the end of the application process and if there are flaws in the documents, then the application may be rejected. One should start maintaining a folder which has all the educational documents, KYC documents, pay slips of the last six months, IT returns of the last three consecutive years, proof of employment of the last 4 years and any other documents as wanted by the creditor. These documents will prove that everything is in place and the loan is easily approved.
- Showing a proper business plan: Since the loan would be required for starting or expanding one’s business, it is a good idea of preparing a blueprint for the business in question and that makes the creditor sure about the feasibility of the CA as a client. The creditor could prepare a plan as to where he sees his company in the next five years, how he proposes to pay off the loan and with the plan he has, how much his monthly expenses are expected to be. Such a blueprint convinces the creditors about the seriousness and meticulous detailing that has gone into the establishing and expansion of the business.
- Enquiry about charges: A CA trying to get a loan should also enquire about additional charges, in addition to the EMIs he has to pay each month, to avoid unexpected expenses. Processing fees, prepayment charges, foreclosure charges are some of them and having an idea about them will allow the CA to set aside money to meet these expenditures. He should also be able to provide a fund equal to three months EMIs so that it can act as a buffer in case sudden unforeseen expenses hinder his smooth EMI payment each month.