Personal loans are usually sanctioned for non-salaried, salaried and self-employed borrowers. The interest rate and documentation varies for personal loans which are given to self-employed individuals. Personal loans usually come in unsecured and secured varieties. They are more flexible and easy to avail in comparison to other types of loans.
Self-employed professionals are those who have ownership of any business that has not been incorporated. However, the interest rate and documentation are different as compared to salaried personal loan applicants. Self-employed individuals are sole proprietors of their businesses. Self-employed borrowers may sometimes find it difficult to obtain personal loans but it is not very difficult.
Banks usually have stringent guidelines and other terms and conditions. Some banks offer personal loans for those who have a good credit score. However, NBFCs have a more lenient approach towards offering personal loans. The interest rate usually depends on the borrower’s repayment abilities and the loan amount. The interest rate varies from one bank to another. The pros in this scenario for personal loans are greater transparency, easy documentation, swift approval, zero restrictions on loan usage, collateral usage options, added benefits from some banks like personal accident insurance and most importantly, competitive rates of interest.
However, self-employed people usually have to shell out higher rates of interest on personal loans and a good credit score is hugely important for availing of a loan. A bank account is mandatory and late payment charges are levied as well. There are no part payments as well. Self-employed borrowers need to provide documents like address and identity proof in tandem with audited financial documents for the last two years including the last 6 months’ worth of bank statements, income proof and so on.
Other necessary documents include proof of workplace ownership, office address and continuity of business. Two passport size photographs are also necessary. These are key points to remember if you are the sole proprietor of a business and wish to apply for a personal loan.