Description

A best personal loan is the most feasible solution while addressing the short-term financial needs of an individual. Usually, personal loans are designed keeping in mind the needs of people (salaried or self-employed) that have a continuous source of income. But, as compared to the salaried class, getting a personal loan can be a greater challenge for the self-employed individuals. This is because; the lenders may find it difficult to assess the ‘risk factor’ while lending money to the self-employed individuals. 

But, that does not mean you have any reason to worry though, if you are a self-employed individual. Go through this blog to know about 10 attractive personal loan schemes for self-employed individuals. 

How are self-employed individuals defined by the lenders?

Individuals who are not salaried and earn income through their own business are termed as self-employed individuals. They are categorized into 2 broad groups-

  • Self-employed professionals- Lenders put certain groups of people into the category of self-employed professionals (SEP). These include architects, doctors running their own clinics, chartered accountants, interior designers and consultants.

  • Self-employed non-professionals- Businesses that are not categorized into the SEP group are put into this category. People engaged in their own trading, manufacturing or services business enterprises can be termed as self-employed non-professionals. 

Eligibility criteria for personal loans for self-employed

The eligibility criteria for personal loans may be different for different lenders. But, for obtaining his desired personal loan amount, a self-employed individual should meet the following criteria to the satisfaction of his lender-

Parameter

Eligibility Criteria

Work experience

Should have been in the present practice for more than 3 years 

Minimum annual turnover

Rs 40 lakhs for self-employed non-professionals 

Rs 15 lakhs for self-employed professionals

CIBIL score

650 or above

banking stability

Bank statements for the last 6 months are checked for average bank balance and number of transactions made

Age group

21 to 65 years

Minium annual income

Rs 5 lakhs

Minimum profit 

Rs 2 lakhs after tax, for self-employed professionals

Documentation criteria for personal loan for self-employed

Different lenders may have different documentation criteria for self-employed individuals. Here, we are listing some of the common documents required by most lenders while sanctioning a personal loan- 

Application Form Completed application form along with passport sized photographs
Proof of identity A copy of your Passport/ Aadhar Card/ Voter ID/ Driving License
Proof of Income A copy of your last 6 months’ bank statement and ITR for 2 to 3 years
Proof of Address A copy of registered rent agreement/your utility bill (Electricity Bill, Ration card etc) less than 3 months old/ Passport
Proof of business existence VAT returns/Service Tax registration/partnership deed/details of incorporation, in case of companies/proof of business address/ GST registration number  

Interest Rates and Charges for self-employed

Personal loan Interest Rates and charges for 10 popular Banks for self-employed

Bank

Interest Rates(per annum)

Processing fee

Pre-closure Charges

ICICI Bank  

11.25% onwards

Between 0.99 % to 2.25% + GST

As determined by the Bank on case to case basis

Kotak Mahindra Bank 

10.5% onwards

2.5% of loan amount + GST

5% of outstanding balance + service tax

Yes Bank

10.99% onwards

Between 0.99 % to 2% + GST

As determined by the Bank on case to case basis

IndusInd Bank

11%  onwards

Between 1% to 2.50% + GST

As determined by the Bank on case to case basis

Fullerton India

13.99% onwards

Up to 6.5% + GST

As determined by the Bank on case to case basis

Bajaj Finserv

11.99% onwards

1.5%  to 3% of the loan amount + GST 

2% of outstanding balance + service tax

IDBI Bank

13.20%  onwards

Up to 1% + GST

2% of outstanding balance + service tax

HSBC Bank

10.75% onwards

Up to 1% of the loan amount + GST

Up to 3.75% of outstanding balance + service tax

Citibank Personal Loan

17 % onwards for self-employed professionals and 17.99% onwards for self-employed non-professionals

2%  to 3% of the loan amount + GST

Up to 4% of outstanding balance + service tax

HDB financial personal loan

13.99% onwards

Up to 2%  of the loan amount + GST

As determined by the Bank on case to case basis

Features & Benefits of personal loan for self-employed

Important features & benefits of 10 popular personal loan schemes for self-employed in India

Personal Loan Schemes for self-employed

Features & benefits

ICICI Bank personal loan 

  • The age of a self-employed individual should be between 28 to 65 years. The minimum age for self-employed doctors is 25 years
  • Only fixed rate of interest is charged by the Bank
  • If you are a pre-approved customer, the loan amount will be disbursed directly to your accounts within seconds
  • The loan can be availed with minimal documentation
  • The maximum loan amount that can be availed by a self-employed individual is Rs 20 lakhs
  • ICICI Bank provides a flexible loan tenure of 12 to 60 months 

Kotak Mahindra Bank personal loan 

  • The loan can be availed with minimal documentation
  • Convenient EMI repayment options such as ECS and PDCs
  • A self-employed individual can avail any amount in the range of Rs 50000 to Rs 15 lakhs
  •  Kotak Mahindra Bank provides a flexible loan tenure of 12 to 60 months
  • Quick disbursal directly to the account , after the loan approval

Yes Bank personal loan 

  • The maximum loan amount that can be availed by a self-employed individual is Rs 40 lakhs
  • Quick loan approval within 60 seconds
  • Customers can choose flexible loan repayment tenures between 12 to 60 months
  • Yes Bank provides easy options of personal loan balance transfer and top-up loans to self-employed individuals
  • Easy EMI payment options through online platform

IndusInd Bank personal loan

  • Any self-employed professional above 25 years can apply for this loan 
  • Simple documentation. The self-employed individuals just need to submit a few basic documents to avail this loan
  • Doorstep services are offered by the lender
  • The self-employed individuals do not need to pledge any security or collateral
  • Easy balance transfer options are provided by IndusInd Bank personal loan
  • Prepayments can be made after paying 6 EMIs

Fullerton India Personal loan

  • You can avail a maximum loan amount up to Rs. 25 Lakhs
  • You can have a flexible loan tenure of up to 48 months
  • The loan is approved instantly after the analysis of documents and entries
  • Once the loan application is approved and processed, the loan is disbursed within 72 hours
  • There is no need to pledge collateral for the loan
  • Provides doorstep delivery and pickup of documents

Bajaj Finserv Personal loan

  • There is no need to pledge collateral for the loan
  • Self-employed individuals can avail the flexi loan facility
  • You can avail a maximum loan amount up to Rs. 25 Lakhs
  • You can have a flexible loan tenure between 12 to 60 months
  • Multiple loan repayment options such as PDCs & ECS
  • Speedy procedure. Online personal loan approval in 5 minutes and cash to account within 72 hours

IDBI personal loan

  • Any self-employed professional above 25 years of age can apply for this loan 
  • The borrowers will be covered with a complimentary personal accident insurance policy
  • Prepayments can be made after paying 6 EMIs
  • Borrowers will be eligible for a top-up personal loan after paying 12 EMIs without default

HSBC Bank personal loan

  • Easy balance transfer options are provided by HSBC Bank personal loan
  • Simple documentation. The self-employed individuals just need to submit a few basic documents to avail this loan
  • Quick disbursal directly to the account, after the loan approval
  • You can have a flexible loan tenure between 6 to 60 months
  • Multiple loan repayment options such as PDCs, SI,NACH & ECS
  • Fixed rate of interest is charged by the Bank

Citibank Personal Loan

  • Speedy disbursal procedure. Loan amount will be credited directly to account within 48 hours of approval
  • The Bank charges a fixed rate of interest
  • You can have a flexible loan tenure between 12 to 60 months
  • A self-employed individual can avail any amount in the range of Rs 1 lakh to Rs 30 lakhs
  • Multiple loan repayment options such as PDCs, SI,NACH & ECS
  • Simple documentation. The self-employed individuals just need to submit a few basic documents to avail this loan
  • Citi Bank provides easy options of top-up loans to self-employed individuals

HDB financial personal loan

  • Any self-employed professional above 22 years of age can apply for this loan 
  • Quick & hassle-free loan application process
  • Doorstep services are offered by the lender
  • You can have a flexible loan tenure between 12 to 60 months
  • A self-employed individual can avail any amount up to Rs 20 lakhs
  • A self-employed individual does not require any guarantor to avail a HDB personal loan
  • Zero prepayment charges. Prepayment is allowed only after paying 6 EMIs

Personal Loans for Self Employed With Bad Credit Score

The credit score is regarded as a ‘mirror’ of the financial health of an individual and it also illustrates how good he has been in repaying his credits. Banks/financial institutions are not quite keen to provide unsecured personal loans to self-employed individuals with bad/low credit scores. This is so because; the lenders perceive such individuals at high risk of default. Therefore, it can be challenging to get a personal loan approved, if a self-employed individual has a bad credit. But, he is certainly not without options. 

An existing gold loan can provide a route through which a self-employed individual can avail a personal loan. Credit score is not checked while sanctioning such loans. 

A self-employed individual with a bad credit score can also meet a bank official in person and try to convince him about his creditworthiness. He should go prepared with all relevant documents that can convey a better account of his financial stability and can enhance his creditworthiness. Some of such documents that can help him are-

  • List of existing assets (home, property, car etc)
  • Job history with salary break-ups
  • Income Tax Returns (ITR) for the at least the last 2 years

There is other method by which a self-employed individual with a bad credit score can secure his much-needed personal loan. If he is not in an emergent need of funds, he can take steps to improve his credit score over a period of time. All he needs to do is to take some proactive steps such as on-time payment of existing credit, staying away from new credit applications and low credit utilization. Such steps can raise his credit score at least by a good 100 points within a time-frame of 3 to 6 months.

Self-employed applicants can also approach Non Banking Financial Institutions (NBFCs). Such institutions often extend credit for applicants with bad credit scores, with or without guarantees/collaterals. But, there is a word of caution! Such loans often come up with higher interest rates as compared to other personal loans. Also, there is a section of lenders who are constantly looking for people in need of a personal loan and have bad credit. Such unscrupulous lenders use unfair means like scams to entice such people into paying exorbitantly high interest rates and, in turn, trap them into a vicious cycle of debt.  Such lenders do not belong to reputed credit unions and one should exercise utmost caution while dealing with them.

Read More : 

Self Employed Personal Loan without ITR and income proof

Self-employed individuals may find it difficult to secure a personal loan if they have no income proof such as audited financial statements and Income Tax Returns (ITRs). This is so because, without these documents, banks/financial institutions struggle to assess their repayment capacity. But, there is no dearth of options for them. They can still avail a personal loan against a fixed deposit or insurance policy at their disposal. 

As the banks can have some sort of a security now, they will not hesitate to sanction a loan up to 75%-80% of the FD value. In case of a personal loan against insurance policy, the loan will be sanctioned only after the policy gets transferred into the name of the lender for the loan tenure. The rate of interest is calculated after considering the insurance premium amount.

P2P (Peer To Peer) lending companies and co-operative banks are also there to provide small personal loans.  Different personal loans schemes are also available. These banks/institutions do not often have strict eligibility criteria and they exist to make people have easy access to credit. 

Moreover, if you are a self-employed individual and are an existing customer of a bank/NBFC, your good relationship may help you avail an instant personal loan too. They may dispense with the minimum income criterion in your case and you can expect a preferential treatment when you apply for a personal loan. 

Therefore, self-employed individuals can avail personal loans even if they do not have ITR and income proofs at their disposal.

Personal Loan for Self Employed with ITR

Among the factors that determine the approval of a personal loan, income is perhaps the most important one as a lender would want to be absolutely sure that there will be no risk of defaulting in the future.

As you are aware of, getting a personal loan can be a greater challenge for the self-employed individuals as compared to the salaried individuals. This is because; the lenders may find it difficult to assess the ‘risk factor’ while lending money to the self-employed individuals. But, if such an individual is earning a steady income and his Income Tax return (ITR) bears ample testimony of it, the banks/financial institutions will not hesitate to approve personal loans to him. The ITR will convey a better account of his financial stability convince the lender about his creditworthiness.

If you are a loan seeker and is self-employed, it is quite natural that one question will keep coming to your mind more often than not- how much loan am I entitled to get with my monthly income? Your ITR will have an important bearing on it. The ITR not only provides a good account of the income of an applicant, it also allows a lender to assess how much loan can be approved for the applicant. Some lenders may look to approve a personal loan amount so that the EMIs remain within 45% to 60% of the monthly income of the applicant. For example, let us assume that you are a self-employed person and your monthly income (including all deductions), falls in the range of Rs 20,000 to Rs 25,000. In this case, a lender would look to approve a personal loan amount such that your EMI does not exceed Rs 12,500, which is roughly 50% of your monthly income. This way, the lenders look to reduce the risk of a possible default. Therefore, if you are a self-employed individual and you can submit an ITR to support your income and repayment capacity, you can get your desired personal loan amount from a lender.  

Axis Bank Personal loan for self-employed

If you are self-employed, now you can get everything you wished for as Axis Bank is here with attractive personal loans for self employed individuals. It provides instant personal loans that are transparent, fast and designed to suit the distinct needs of self-employed individuals. Currently, the bank is offering a loan at an interest rate starting from of 15.50% onwards. You can have flexible loan tenures up to 5 years with ₹15 Lakh being the maximum loan amount you can avail from the bank. The Axis Bank personal loan for self-employed comes with zero prepayment charges, zero foreclosure charges, low processing fees & convenient repayment options (ECS, PDCs etc). Moreover, you do not need to pledge any security/collateral for availing this loan.

Axis Bank personal loan requires minimal documentation. Submission of only a few basic documents is enough from your end. Also, you get the complete flexibility of end-use on the Axis Bank personal loan amount. You can use the funds pretty much for any genuine purpose. No questions will be asked.

To be eligible for an Axis Bank personal loan for self-employed, you should be in the age group of 21 to 60 years. The minimum income should be Rs 15,000 per month. The registration/qualification documents for different self-employed professionals (architects, doctors, CS, CA, engineers, ICWA etc) may vary from customer to customer.

Bajaj finance personal loan for self employed

Bajaj Finance provides highly customized personal loans to address unique needs of self-employed individuals. Bajaj Finserv personal loans come with highly competitive interest rates, speedy loan approval and other unique features. It provides instant personal loans that are highly transparent, easily available and are designed to suit the needs of self-employed individuals. Attractive benefits such as online personal loan approval in 5 minutes and cash to account within 72 hours can be availed by self-employed individuals.

Currently, it is offering a personal loan at an interest rate starting from 11.99% onwards. You can have flexible loan tenures up to 5 years with ₹25 Lakh being the maximum loan amount you can avail from the bank. The processing fee is also nominal (in the range of 1.5% to 3% of the loan amount). No collateral is required. Multiple and convenient repayment options (ECS, PDCs etc) are also offered to self-employed applicants.

With a Bajaj finance personal loan, the self-employed individuals can avail the flexi loan facility as well. Here, the personal loan works as an overdraft where customers can deposit, prepay, and withdraw their loan accounts. Any amount in the range of Rs 25,000 to Rs 2,00,000 can be borrowed. The interest needs to be paid only on the amount used. For availing the flexi loan facility, you need to be an existing customer of Bajaj Finance.

SBI Personal loan for self-employed

The State bank of India (SBI) has been ruling the Indian banking sector for many years now. SBI personal loans have been one of the most preferred choices for individuals in pursuit of funds to address their urgent requirements.  If you are self-employed, all your short-term financial needs will be covered with attractive SBI personal loans for self employed. It provides instant personal loans that are designed to suit the distinct needs of self-employed individuals.

 Currently, the bank is offering a loan at an interest rate starting from of 11.90% onwards. You can have flexible loan tenures up to 4 years with ₹15 Lakh being the maximum loan amount you can avail from the bank. The SBI personal loan for self-employed comes with zero prepayment charges, zero foreclosure charges, low processing fees & convenient repayment options (ECS, PDCs etc). Moreover, you do not need to pledge any security/collateral for availing this loan.

SBI personal loan requires minimal documentation. Submission of only a few basic documents is enough from your end. Also, you get the complete flexibility of end-use on the SBI personal loan amount. You can use the funds pretty much for any genuine purpose. No questions will be asked.

To be eligible for an SBI personal loan for self-employed, you should be a minimum of 21 years of age at loan application and a maximum of 58 years at loan maturity. The minimum Net Monthly Income (NMI) should be Rs 7,500. The registration/qualification documents for different self-employed professionals (architects, doctors, CS, CA, engineers, ICWA etc) may vary from customer to customer. Latest Bank statement or Latest ITR and Form 16 are required for self-employed individuals

HDFC personal loan for self employed

HDFC personal loan has been able to carve a niche among the Indian loan seekers as one of the most preferred personal loan options, with its selected range of benefits. It offers customized solutions for self-employed individuals as well, whenever they need money to meet any financial needs such as business expansion, traveling, foreign education, and wedding or for any other legitimate purpose.

Currently, the Bank is offering a personal loan at an interest rate starting from of 15.50% onwards. You can have flexible loan tenures up to 5 years with ₹20 Lakh being the maximum loan amount you can avail from the bank.  The maximum loan amount can be increased for certain cases and in selected locations. The processing fee is also nominal (up to 2.5% of the loan amount). No collateral is required. Multiple and convenient repayment options (ECS, PDCs etc) are also offered to self-employed applicants.

To be eligible for an HDFC personal loan for self-employed, self-employed individuals should be in the age group of 25 to 65 years. The minimum income should be Rs 1,00,000 per annum. The registration/qualification documents for different group of self-employed professionals (doctors, CA, engineers, etc) may vary from customer to customer. For example, a post qualification experience of at least 5 years is required for Architects & Company Secretaries. An experience of 4 years is required for Doctors  & Chartered Accountants. A credit score of 700 or above is desirable for self-employed applicants.

FAQs
Q1 How can I repay my Personal Loan for self-employed?
You can easily repay your personal loan in equal monthly installments (EMIs). The EMI can be paid through multiple modes such as post-dated cheques (PDCs), ECS or a standing instruction (SI) to debit your Bank account with the EMI amount.
Q2 What are the benefits of applying for a personal loan online?
Applying for a personal loan online has many advantages. It is much more convenient when compared to visiting a bank. You can apply anytime you want, from your own comfort. Many lenders provide the facility of uploading the required documents in their online platform itself. This makes the procedure paperless and quick. Many third party aggregators also provide the facility of comparing different personal loan schemes on their online platforms.
Q3 Can I postpone my EMI payment date?
Most lenders do not allow borrowers to postpone the specified EMI date. If you miss the payment.you will have to pay a late charge. Your credit rating will also be impacted negatively if you do not pay your EMIs on time.
Q4 Do I need a collateral to avail a personal loan for self-employed?
As personal loans are of unsecured type, lenders normally do not ask for a collateral. Lenders assess your repayment capacity from your ITRs and other financial documents.
Q5 Is there any option to transfer the balance of my existing personal loan for self-employed?
Yes. Most reputed lenders offer attractive personal loan balance transfer schemes. Here, you can transfer the outstanding balance of your existing personal loan to any lender of your choice and get benefits such as lower interest rates, processing fee waiver and so on.
Q6 Will I have a pay a fee/charge in case I decide to make any prepayment to my personal loan for self-employed?
Yes. You need to pay a nominal pre-payment fee, which is equal to certain percentage of the amount you want to pre-pay. Applicable taxes will be applicable as per Govt. norms. Different lenders levy different prepayment charges on their borrowers.
Q7 How many times can I make pre-payments to my personal loan for self-employed?
Different lenders may impose different limits on the number of prepayments you can make to your personal loan for self-employed. Some lenders may even provide unlimited number of prepayments. As a usual practice, pre-payments are allowed only after paying 6 EMIs, without any default. 
Q8 What benefits will I get if I apply for a personal loan online?
Applying for a personal loan online has many positives. You can apply anytime you want, from your own comfort. You are not required to visit a bank/financial institution. Many lenders facilitate uploading the required documents in their online platform. This makes the procedure fast and paperless. Many third party aggregators such as Afinoz also provide the feature of comparing different personal loan schemes on their online platforms.
Q9 Can I transfer the balance of my existing personal loan for self-employed to another Bank?
Yes. Most reputed lenders offer attractive loan balance transfer schemes. You can transfer the remaining balance of your personal loan to your chosen lender and receive benefits such as lower interest rates, processing fee waiver etc.
Q10 Will I be asked for a collateral when I apply for a personal loan for self-employed?
As personal loans are mostly of unsecured type, lenders do not usually ask for collateral. They assess your repayment capacity from your ITR (Income Tax Return) and other financial documents.
Q11 How many pre-payments can I make to my personal loan for self-employed?
Different lenders have different limits imposed on the number of prepayments that can be made to a personal loan. Some lenders do not even have any limit on the number of prepayments. Pre-payments are normally allowed only after paying off minimum 6 EMIs, without any default.
Q12 Do I need to a pay a fee/charge when I make any prepayment to my personal loan for self-employed?
Yes. You need to pay a pre-payment fee equal to certain percentage of the amount you want to pre-pay. This percentage is different for different lenders. In addition, applicable taxes will be charged as per Govt. norms.
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