Global markets are rife with the discussion of an economic recession, and the World Bank and IMF predictions that the global GDP will fall to 2.8% in 2023 from 3.4% in 2022 provide impetus to this. However, recent data suggests that India is not headed for recession. The Morgan Stanley Report predicts an economic boom for India, which will make it the third-largest country in the world by the year 2027.
That said, prudent financial planning calls for a contingency plan prepared well in advance. To avoid financial crises, professionals can opt for specifically curated loans such as CA or doctor loans to maintain liquidity. Self-employed professionals can use these to keep their business afloat, get opportunities from new markets, and upskill to cater to client demands.
Professional loans are thus tailor-made, targeting solutions that professionals can use to navigate times of economic uncertainty. Keep reading to know more.
Professional Loans: A Financial Safety Net for Professionals
Many businesses operate in tight working capital cycles. A small disruption can cause a large ripple effect, leading to bottlenecks and subsequent loss of revenue. During a recession, this becomes more pronounced as cash flows tighten with no foreseeable pipeline for capital inflows. The top strategy to combat this is to secure access to funds.
Professionals such as lawyers, doctors, CAs, company secretaries, architects, and others running their businesses can do so by applying for professional loans. These loans are typically available at lower interest rates without any need for collateral.
In a poor economy, consumer spending naturally lowers. Clients will be extremely careful with spending and investing their money. Hence, your practice should aim to provide high-quality, focused solutions with better ROI.
4 Ways to Maximise the Benefits of Your Professional Loan
A doctor loan, CA loan, or loan for lawyers and more are available for self-employed professionals to meet varied needs. Here are a few examples of how you can make the most of your loan:
- Pump Fresh Funds Into the Business
When facing economic downturns, a standard practice is to take stock of your finances. It helps you understand what you are spending today and to anticipate your needs over the next few months. If your business does not have at least six to nine months of basic expenses as liquid capital, a loan will be beneficial. This way, you can stay ahead of the curve and do not have to wait till you run out of funds to apply for fresh financing.
This influx of working capital can be used towards staff salaries, hiring and training the right talent, updating your premises, investing in the right marketing channels, focusing on automation, participating in exhibitions and networking events, investing in customer retention, and so on.
- Onboard New Clients
Attracting new clients is a big undertaking, and more so during a recession. For instance, due to their intrinsic nature, medical services are highly sought after even during recessions. However, new clients will prefer doctors with good referrals, world-class equipment, and high-quality service.
To meet these expectations, medical professionals can avail of doctor loans to undertake courses to up-skill to be updated with the best practices, buy the right equipment, and provide cutting-edge services. These loans don’t have any end-use restrictions, meaning that doctors can use the funds for the purchase of medical software, hiring qualified staff, and much more.
- Pay Off Existing Loans
Since economic instability may go on for an unforeseen period, it is best to clear off any impending loans at the earliest. For instance, the business may be operating out of a property that has been pledged as collateral for a pre-existing secured loan.
The entire practice is at risk if the loan EMI is not paid, as the lender may have to claim the property after continued non-payment. In such a scenario, professional loans can be availed as they are free of collateral and come at lower interest rates based on eligibility.
The repayment terms are also flexible for these loans, with doctor loans repayable for up to 84 months. The loans are also available in variants such as flexi-term loans, flexi-hybrid loans, and more. This gives professionals the freedom to tailor repayment as per their revenue.
- Invest in Resources
A recession can put a spanner in the works for professionals who recently set up their business or were poised to grow. The change in customer expectations may also necessitate investing in newer resources.
For instance, loans for lawyers with their practice allow you to invest in cloud security and data protection. This is important to preserve the confidential details of clients, which is garnering more concern today than ever before. It also allows you to pay off international travel expenses made by attending legal conferences and seminars.
What are the Eligibility Criteria to Avail a Professional Loan?
While the eligibility differs from profession to profession, general eligibility terms require you to be an Indian citizen. Your age must be between 22 and 73 years. A CIBIL score of 685 or higher is also required. In addition, you may need to meet the minimum income requirement and other criteria related to business vintage and professional qualifications. That said, professional loans have terms that are easy to meet, as these loans are tailored to meet the needs of self-employed professionals.
All in all, professional loans equip professionals with the financial freedom to protect their practices from instability. Access to funds within 48 hours, minimal documentation, affordable interest rates, and specially curated terms are some benefits of availing these loans. The absence of an end-use restriction is the cherry on the cake, allowing you to deploy these funds for any business use.
While opting for professional loans such as doctor loans, be prudent about borrowing only what you need. While lenders may offer around ₹55 Lakhs or more, don’t overborrow due to their easy availability. Finally, make sure to compare all the options available in the market before making a decision, and choose a loan that gives you financing at the most favourable terms.
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