Pros And Cons Of Availing CA Loan

Posted by Anuj Pandey on December 1st, 2017

After a taxing journey of preparation, it is time for Chartered Accountants (CAs) to book the profits. Whether you are a consultant or a practicing Chartered Accountant in a government or a private organization, you can avail business loans from non-banking financial companies (NBFCs), to realize your dreams. Bajaj Finserv provides Chartered Accountant Loans that cater to the different financial goals of CAs.

The cost of client management software, office automation software, and GST-based accounting software of your firm can run into several thousands. Office equipment, computers, network connectivity, cyber security, and other working capital needs amount to a major chunk of a CA firm's expenditure.

According to statista.com, the total annual information technology security expenditures are projected to reach USD 1.5 billion in 2017.

According to the KDK software, GST is estimated to create a Rs. 36000 crore market for software providers who deal in tax compliance, accounting, and invoicing software.

You can avail a business loan specially designed for chartered accountants to meet these costs.  

Pros Of Business Loans For Chartered Accountants From Bajaj Finserv

1. High Loan Amount

You can avail chartered accountant loans up to Rs. 30 lakh. It is the highest loan amount offered online in India. You can choose a tenor ranging from 12 to 60 months, and it is available across the country.

2. Collateral Free

You can get a chartered accountant loan without pledging collateral. This reduces the need for extensive documentation, as there is no requirement for asset valuation.

3. Line of Credit

Bajaj Finserv extends a flexible line of credit from where you can withdraw a loan amount as per your firm’s financial requirement. This gives you an advantage to pay interest only on the amount of loan borrowed, rather than the whole line of credit.

You can re-avail the funds, within the drop-line facility during the loan tenor, till the loan’s credit limit is exhausted. Funds can be availed without any additional documentation.

4. Part Prepayment Facility

Chartered accountant loans have part-prepayment facility. Once you have a surplus amount, you can prepay the borrowed amount. The minimum amount should be 3 times of the EMI for the part prepayment. You can prepay 6 times in a calendar year, post the clearance of your first EMI.

If the part payment in a year is less than 25% of the outstanding principal, then no penalty or part prepayment charges are levied.

5. EMIs Include Only The Interest Of CA Loans

With chartered accountant loans, you pay only the interest component of the loan as your equated monthly instalments (EMIs). The principal amount is paid at the end of the loan tenor.

For example, if you take a loan of Rs. 10 lakh for 36 months at the interest rate 12%., you would have to pay only the interest which amounts to monthly pay-outs of Rs. 10000.

6. Tax Benefits

Business loan for chartered accountants can help you save on taxes. The interest on the business loan can get you taxation benefits.

The interest on the business loan amount is deductible from the gross income of your company. The interest amount is paid from the business income as a service fee for using the borrowed funds.

You should preserve the documents related to the interest rate, terms and conditions, and processing fees of the loan, in order to avail the tax benefits.  

However, the principal amount of the loan does not give you tax benefits as it is not the business income.

7. Online Access

Chartered accountant loans can be easily applied for and managed from Bajaj Finserv’s online customer portal, Experia. You can drawdown, prepay, and download documents from this online platform.

Cons of Chartered Accountant Loans

Here are some downsides of business loan for chartered accountants. However, they are insignificant compared to the advantages these loans offer to you as a chartered accountant.

• Part payment charges will be levied on the amount which is paid over and above 25% of the principal outstanding for the year.

• Lack of documents can jeopardize the approval of your CA loan. Some of the important documents include, but are not limited to, Certificate of Proficiency (COP), KYC proof, On property proof (you need to have your own house, parental house, or own office) etc.

• To avail CA loans, you need minimum of 4 years from COP as of today

• Apart from the interest rates, there are other fees and foreclosure charges. You should check the fee structure before applying for the loan.

You can apply for CA Loans online. Whether your firm/company deals with audit, taxation, or consultation, you can get the business loan approved within 24 hours.