You may be a Chartered Accountant who is seeking to start his own practice. Or you may already have a CA firm running and need additional funds for:
- meeting operational expenses,
- integrating technology into business,
- meeting working capital needs or
- hiring additional staff to render services to your customers.
To cater to all your professional needs, there are a host of CA loans offered by various banks and financial institutions.
These loans are offered in the form of ‘Professional Loans’ or ‘Business Loans that cover Professionals’.
Professional Loans for chartered accountants provide benefits of :
- immediate fund availability,
- online fund management,
- flexible loan facility allowing you to pay interest only on the utilized loan amount,
- no collateral etc.
However, you must consider the eligibility criteria and terms and conditions before choosing a particular loan option.
Compare the loan offers from different banks on the basis of the interest rates, tenure, prepayment charges, processing fees etc.
In this detailed guide, you will learn about:
- CA loans available,
- Features and benefits of CA Loans and
- Interest rates at which these loans are offered by various banks and financial institutions.
What Is a CA Loan?
A CA loan is a type of a professional loan that is customized for chartered accountants keeping their professional needs into consideration.
These can be availed by practicing or professional chartered accountants to meet their business or professional needs such as:
- business expansion,
- buying office premises,
- purchasing equipment,
- meeting working capital requirements etc.
These loans offer a variety of benefits to chartered accountants and are offered taking into consideration your professional degree and experience.
These require minimum documentation, an easy eligibility criteria and are made available instantly. Chartered accountants are thus able to avail higher amounts of loan at lower interest rates.
Features & Benefits of CA Loans
Chartered Accountants, like other professionals such as doctors, lawyers, architects etc, have unique professional goals.
Therefore, they need loans that are customized according to the underlying business needs. A variety of banks and financial companies offer loans for Chartered Accountants to help them meet their financial needs.
Let’s have a look at the features and understand reasons as to why you should consider availing a CA loan.
1. Adequate Loan Amount
The amount of professional loan availed by Chartered Accountants vary from bank to bank. It usually depends upon the credit history and nature of business of the Chartered Accountants.
Chartered accountants can avail professional loan of a specific amount depending on the bank they are availing loan from to finance their business needs.
Here are the loan amounts given under CA loan by various banks and other financial institutions:
|Bank Name||CA Loan Amount|
|Bajaj Finserv||Up to Rs. 35 lakhs|
|HDFC Bank||Maximum of Rs 75 lakhs (in some locations)|
|ICICI Bank||Based on the kind of business and your relationship with the bank|
|Fullerton India Credit Company Ltd||Up to Rs. 50 lakhs|
|Federal Bank||Maximum of Rs. 2 crores|
|Corporation Bank||Rural Areas – Rs. 10 lakhs|
Semi Urban Areas – Rs. 50 lakhs
Port Town and Urban Centres – Rs. 2 crore
Metro – Rs. 5 crore
|Bank of Baroda||Minimum – Rs. 10 lakhs|
Maximum – Rs. 5 crores
2. Flexible Repayment Tenure
Professional loans provided by various banks to Chartered Accountants can be repaid in easy installments.
Chartered accountants can choose to repay these professional loans in installments after considering their cash flows and revenues.
Generally, banks offer a tenure ranging between 12 months to 60 months for repayment.
|Bank Name||CA Loan Tenure|
|Bajaj Finserv||12 months to 60 months|
|HDFC Bank||12 months to 60 months|
|ICICI Bank||48 months|
|Fullerton India Credit Company Ltd||12 months to 60 months|
|Federal Bank||Up to 84 months|
|Corporation Bank||Up to 84 months|
|Bank of Baroda||Up to 84 months|
3. No Need For Collateral
Chartered Accountants are not required to give any security, collateral or present any guarantor to avail such loans.
Professional loans are thus unsecured loans made available to chartered accountants based on their years of practice, credit score and history and existing and projected cash flows.
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4. Availability of Funds Within 24 Hours
Professional loans are instantly made available, usually within 24 hours. This again depends on the bank or financial institution you approach for availing such a loan.
5. Attractive Interest Rates
Professional loans provide adequate loan amounts at competitive interest rates. Here’s an interest rate comparison between various banks and financial institutions offering professional loans:
|Bank Name||CA Loan Interest Rate|
|Bajaj Finserv||14% – 15% with processing fee of 2%|
|HDFC Bank||13.29% with processing fees as low as 0.99%|
|ICICI Bank||16.49% to 18.99%|
|Fullerton India Credit Company Ltd||13% to 21% with processing fees up to 6.5% of the loan amount|
|Federal Bank||12.95% to 14.45%|
|Corporation Bank||11% with processing fees of .75% with a minimum of Rs. 5,000|
|Bank of Baroda||Micro Entreprises – (MCLR + SP) +1.35%|
Small Entreprises – (MCLR + SP) +1.50%
Medium Entreprises – (MCLR + SP) +1.75%
6. Minimum Documentation Required
Professional loans require chartered accountants to provide almost similar documents as needed for KYC while opening an account with a bank.
However, additional documents may be demanded by various banks or financial institutions at the time of loan processing. In general, banks/financial demand the following documents:
- Business Proof – Certificate of Practice or Qualification Certificate, Partnership Deed, MOA and AOA or Shop Act License
- Photo Identity Proof – which includes PAN Card, Aadhaar card, voter identity card, passport, driving license
- Address Proof – such as Aadhaar card, Ration Card, passport, driving license, Electricity Bill, Telephone Bill, Sale deed or Property Purchase Agreement in cases where properties are owned
- Income Proof – including latest ITR, Bank statement of past 6 months for evaluating your current financial position, latest audited financials such as balance sheet and profit and loss account for the past two years
7. Online Management of Funds
With easy online application, chartered accountants can apply for professional loans and manage their loan accounts anytime, anywhere.
They can track loan status online and avail loan amount quickly and easily.
8. Flexible Loan Facility
With flexi loan facility, chartered accountants get greater flexibility in respect of utilizing and repaying such loans.
It’s a kind of an overdraft facility offered by the banks to chartered accountants to meet their prompt financial needs.
Under this, banks offer a pre-approved loan limit to the chartered accountants which is credited to their bank accounts.
Chartered Accountants can then use the amount of money as required by them. Thus, flexi loan facility allows the professionals to:
- the borrowers to withdraw only the requisite amount of money for the underlying need. This amount is within the range of the credit limit extended by the lender to the borrower. Thus, if the borrower has some immediate need for which he needs funds , he can easily withdraw money from his loan account.
- pay interest only on the amount of money utilized by the borrower. This is irrespective of the amount of credit limit extended by the lender. Say for instance, the credit limit extended by the lender is of Rs. 35 lakhs. However, the Chartered Accountant only requires an amount of Rs. 10 lakhs immediately. He is, thus, required to pay interest only on the amount utilized, that is Rs. 10 lakhs.
- prepay the amount of loan availed and reduce their EMI. Various lenders have their own prepayment criteria. Some offer this facility at no additional charges whereas others charge for the same. You must consult your lender for the prepayment option before availing the loan.
9. Door Step Services
Banks or financial institutions offering professional loans to Chartered Accountants provide door-step services.
They collect all the documents from your home or place of work, relieving you from submitting the documents physically.
Eligibility For CA Loan
Although different lenders have different eligibility criteria, here’s a list of general eligibility criteria for chartered accountants to avail a CA loan:
- having a certificate of practice with minimum 4 years of work experience post qualification
- a minimum of 25 years and a maximum of 65 years of age at the time of loan maturity
- must have a minimum annual income of Rs. 1 lakh
- business must be a profit making business from the past 2 years
- Good CIBIL score
List Of Banks Offering CA Loans
A variety of banks and financial institutions provide professional loans to chartered accountants. Some of these include:
- Bajaj Finserv
- HDFC Bank
- ICICI Bank
- Corporation Bank
- Fullerton India Credit Company Ltd
- Federal Bank
- Bank of Baroda