Better Future for Chartered Accountants: Financing Facilities Available

CA exam conducted by ICAI in last November had a pass percentage of 35.10, with just above 35,000 candidates out of more than 87,000 securing pass marks. This data shows the exclusivity of this profession, with a minimal number of students making their mark in this field.

Remarkably, data from 2018 suggested roughly 2.82 lakh CAs in India, out of which only 44% of professionals were involved in full-time practice.

• Conducted twice a year, 2019 had a total of more than 1.17 lakh students appearing for CA foundation exams out of which a little more than 36,000 candidates secured pass marks.
• Number of candidates appearing for CA foundation exam in 2019 was a sharp rise from its previous figure of around 54,000 candidates in 2018.

An exclusive profession in terms of the number of professionals involved in it, many CAs find it challenging to establish their personal practise solely because of the financial back up that is vital to set it up. Consequently, many financial institutions offer business and personal loans for chartered accountants to aid them set up their practice.

However, before moving into the features of these lines of credit, which allow CAs to create a better and successful future for themselves, it is vital to note the different loans which are available.

1. Business loans: Similar to personal loans in terms of its unsecured nature, these loans offer up to Rs.37 lakh in credit to meet any business-related financial need.
2. Personal loans: Personal loans for chartered accountants are collateral-free lines of credit which do not have any end-use restriction, thereby allowing CAs to use this available financing to meet any monetary necessity.
3. Home loans: CAs looking to build their home can avail these loans which usually have a repayment tenor stretching up to 240 months.
4. Loans against property: Offered against collaterals, these loans offer up to Rs.2 crore in credit. These too have a repayment tenor going up to 240 months.

With various financing facilities being offered by different financial institutions, potential borrowers of personal loans for chartered accountants should note these features discussed below. Vitally, these should be compared before applying for a line of credit to make the best choice.

1. High loan amount: Offering up to Rs.37 lakh in credit, these loans can be used to fulfil any financial necessity. While this can be used to establish a practice, CAs can also use it for expansion. In such a case, individuals should learn useful tips on how to expand a CA firm.
2. Minimal documentation: Since personal loans for chartered accountants are collateral-free, they have minimum documentation requirements. CAs must produce their KYC details, financial documents and qualification certificates. This also helps in fast approval, which is usually followed by disbursal within 24 hours.
3. Choice of tenor: Borrowers of personal loans for chartered accountants can choose any tenor between the range of 12 and 72 months, as per their convenience.
4. Ease of application: NBFCs like Bajaj Finserv provide pre-approved offers, which make the application process prompt and easy. Such offers are provided on various financial products like personal loans, business loans, etc.

While these features discussed above are offered on personal and business loans, there are a few things which should be kept in mind while applying for a line of credit. Notably, these are as much relevant for home loans for chartered accountants, as these are for collateralised lines of credit.

1. Choosing a line of credit: CAs must decide on the loan they plan to apply for, depending on their financial need and availability of collateral. Typically, unsecured loans are disbursed faster and have minimal document requirements.
2. Comparing various loans: After choosing their line of credit, be it a personal loan for chartered accountants or otherwise, it is vital to compare different schemes from multiple financial institutions. This involves checking interest rates and offered features, along with comparing their total repayment amount, which can be checked using an online calculator.
3. Checking requirements: Eligibility criteria of a loan must be checked, followed by arranging every necessary document to hasten the application process.
4. Planning repayment structure: The repayment structure of a loan should also be planned to minimise any risk of default.

Be it a personal loan or a home loan for chartered accountants, keeping these above pointers in mind helps a borrower in selecting the right advance. Once a CA has his/her loan application approved, it is advisable to check available tax benefits too. This can immensely reduce their loan repayment burden.

• As of May 2018, intermediate CA exam pass percentage in both groups was recorded at 17.11%, with just above 4,000 candidates out of more than 25,000 individuals making the cut.
• May 2019 also recorded just a meagrely 7.63% pass percentage for CA finals in both groups combined, with 1187 candidates securing pass marks out of more than 15,000 individuals.

To conclude, upcoming CAs who are establishing their practice through financing should also plan its details before venturing into it. There are various types of client strategies for CAs, and every professional must explore these ideas to select the apt one for their location and clientele.