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Compared to the size of the Indian market, the number of chartered accountants in India is substantially low. Currently, there are only about 1,40,000 practicing CAs in this country. Compare this to the USA, which has less than a third of the Indian population but around 6,64,000 CPAs (the American equivalent of CAs). Even Britain which houses a paltry 55 million inhabitants has over 1,50,000 CAs.
It is, therefore, clear that Indian CAs invariably cater to a massive number of clients. Chartered accountancy firms need to stay updated to meet this enormous demand, and it takes sizeable capital to do that.
Do CAs need business loans?
Chartered accountants may need extra capital for a variety of reasons. From expanding their client base to set up new premises, the potential areas of expenditure are practically endless. It often becomes a burden to finance these endeavors out of one’s own pockets.
That is where a business loan for CA may come in handy. You may avail these loans to fund your business growth, get new clients, consolidate debts, or any other purpose you deem fit. NBFCs offer Business Loan for Chartered Accountants with attractive rates and easy repayment terms.
Also Read – Everything about house loans for doctors.
There are a few things that you should do and a few others that you shouldn’t while availing a business loan for Chartered accountants.
DON’T: Exceed the golden debt to income ratio
The total monthly financial liabilities should not be more than 50% of your income under any circumstances. Ideally, it should be around 30% or less. The more money you tie up to EMIs, the less working capital is free for your day to day operations.
DO: Know the exact cost of your loan
Lenders offer CA loans at different interest rates. They may or may not charge additional processing fees and other related charges. It may pose a challenge if you want to compare the cost of these lenders.
A practical way to handle this situation is to ask them the APR or Annual Percentage Rate. It is the total cost of availing the loan including all variable charges and fees on your CA loan.
DON’T: Take two or more loans simultaneously
Taking more than one loan at the same time may put immense pressure on your finances at the time of repayment. It also affects your firm’s credit history adversely.
DO: Research your options well
Numerous financial institutions offer comparable terms for this unsecured business loan. Research as many options as you possibly can. NBFCs are a popular option as they offer flexible repayment terms and attractive CA loan interest rates. Make a comprehensive list of all the pros and cons of all the financial institutions before finalizing the lender.
DON’T: Ignore the fine prints
Scrutinize all the terms and conditions. Do not skim over the fine prints as the devil is almost always in the details. Read the repayment terms, fees and charges applicable, end usage restrictions, etc. thoroughly.
A business loan for CAs can help you in several ways. It can be the impetus required to take your CA business forward. Pay heed to these do’s and don’ts for the best terms on your loan.
