Many financial institutions often think twice before granting a personal loan for proprietorship firm employees. That is because proprietorship companies are run by individuals and are deemed as high-risk businesses. Any dip in the company’s performance may jeopardize the debtor’s job and hamper their ability to repay the loan.
However, you can easily avail yourself of a personal loan for proprietorship employees with enough planning and awareness. Here’s a guide that will make the entire process of getting a personal loan for salaried employees in a proprietorship company simple and easy.
Additional Read: Personal Loan of up to Rs. 40 Lakh
Personal loan for salaried employees in proprietorship company
If you work in an unlisted company, you can apply for an employee loan either from a private sector bank or a non-banking financial company (NBFC). While some prominent private sector banks offer a personal loan for salaried employees in a proprietorship company, their terms and conditions are often quite stringent.
On the other hand, NBFCs carefully evaluate the loan repayment capacity of salaried individuals primarily based on their monthly income. They also take into consideration other abstract factors, such as the applicant’s relationship and tenor with the company, so they can determine if their job will remain stable or not. This evaluation ensures that loans are disbursed only to eligible candidates who can repay them without any trouble.
Eligibility criteria for an employee loan from private sector banks
Most private banks follow standardized rules for granting employee loans:
- The applicant should be between 21 years and 58 years of age.
- The minimum salary of the applicant should be Rs. 25,000 (metropolitan cities) or Rs. 20,000 (other cities).
- Applicants who receive their salary in cash are not eligible for a personal loan for proprietorship firm employees.
- Employees need to provide a completed application form, KYC documents, income tax returns (ITR) proof for the last six months, and salary slips for the previous six months.
- Applicants should have a minimum work experience of one year in the industry and should be working in the same company for the last six months.
- Applicants are also required to have a CIBIL score of at least 685 or higher to get the application processed.
- Individuals opting for a first-time loan may or may not be granted a loan entirely at the bank’s discretion.
Eligibility criteria for an employee loan from NBFCs
The criteria for getting a NBFC personal loan are slightly different from those of private banks.
- The applicant should be between 21 years and 67 years of age.
- The applicant must have a minimum monthly income of Rs. 22,000 based on the city of residence.
- NBFCs also consider other factors such as the place of residence, overall work experience and industry of the candidate before granting a personal loan for proprietorship firm employees.
- Applicants need to have at least three years of total work history and at least one year of work history in the same company.
- Applicants with a cash salary are not eligible for an employee loan.
How to calculate the EMI on a personal loan for employees in proprietorship companies
- The overall calculation of the EMI depends on the sanctioned loan amount, the applicable personal loan interest rates, and the tenor of the loan.
- Apart from these points, private banks and NBFCs also consider the individual’s net income of, their job stability, and CIBIL score to determine the rate of interest.
- Employees with high reliability and CIBIL score have a better chance of getting a loan at lower interest rates.
- You can also use the EMI Calculator to plan your repayment journey before you opt for a personal loan.
Summary: The whole point of getting an employee loan is to finance immediate expenses and avoid digging into your savings. These days it is easy to avail of a personal loan for proprietorship firm employees, provided you are aware of how to go about it. Getting a personal loan for proprietorship employees depends on specific eligibility criteria such as your age, salary and the nature and tenor of your employment. If you have a stable job and meet the eligibility criteria, you can conveniently opt for an employee loan from a private sector bank or an NBFC.
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