Small Business Owner: How much loan can I get with my ITR returns of Rs 13.3 lakhs?

Ans: The doctor needs Rs.25 lakhs as an OD loan.

The property offered as security is worth Rs.35 lakhs.

The doctor’s gross receipts as per ITR is Rs.15 lakhs.

Now, let us estimate and project how much income should be shown for loan purposes.

This answer is written for a typical Indian bank loan assessment situation.

Loan Requirement and Asset Collateral

The doctor needs Rs.25 lakhs as OD loan.

The land offered is valued at Rs.35 lakhs.

Most banks accept land as collateral. But only to a certain extent.

Banks usually give only up to 60% of land value as loan.

In some cases, it may go up to 70%, if land is in urban zone.

That means, from Rs.35 lakhs, a maximum of Rs.21-24.5 lakhs may be considered.

Hence, the property alone may not fully support a Rs.25 lakh OD loan.

The bank will look at income capacity also to approve the loan.

The doctor must justify his loan repayment capacity.

Income Capacity Based on ITR

The gross receipts are Rs.15 lakhs per year.

But banks don’t use gross receipts directly for income calculation.

They look at net profit after expenses.

Generally, for professionals like doctors, 50% of gross is considered net income.

That means, Rs.7.5 lakhs per annum could be counted as income.

On that basis, monthly income is Rs.62,500.

Based on that, a loan EMI of Rs.25,000 to Rs.30,000 may be accepted.

This can justify a loan of Rs.25 lakhs under OD scheme.

But if ITR shows lower net income, loan may get reduced.

What Should Be Shown to Bank as Estimate and Projection

The doctor needs to show projected income to match the OD loan.

The bank will seek a projected Profit and Loss Statement.

It must show enough surplus to support Rs.25 lakh OD usage.

Following things must be shown in that estimate:

Projected Gross Receipts of minimum Rs.18 lakhs per year.

Net income of Rs.9-10 lakhs per year should be shown.

Clear monthly surplus after household expenses.

Justification of higher patient flow, more consulting hours, or new clinic set-up.

Mention of better tie-ups with hospitals or new locations.

Show clarity in expense reduction or cost control.

Highlight prior loan repayment discipline, if any.

Show bank statements with good cash flow and regular deposits.

This gives bank confidence on repayment and limits usage.

Property Backing: Conservative Evaluation by Bank

Most Indian banks don’t consider full market value of land.

They apply distress value or forced-sale value method.

For Rs.35 lakhs land, they may consider Rs.28 lakhs only.

And even on that, they give 60% to 70% as security margin.

So, practical loan limit on land is around Rs.20 lakhs.

Therefore, balance Rs.5 lakhs should be supported by income strength.

Key Documents Needed to Strengthen Case

ITR for 3 years with rising income trend.

Bank statements showing steady inflows.

CA-certified projected income and balance sheet.

Clinic ownership or rent agreement.

GST returns, if applicable.

Patient footfall records or appointment logs.

Income Projection Strategy to Show to Bank

Show Rs.18 lakhs as expected gross revenue this year.

Keep expenses around Rs.7-8 lakhs.

This leaves Rs.10 lakhs net income.

Of this, Rs.4 lakhs can be shown as family expenses.

Balance Rs.6 lakhs is surplus available for loan.

That is Rs.50,000 per month available.

Bank will accept EMI or OD interest within Rs.40,000 limit.

This makes the OD of Rs.25 lakhs reasonable.

Keep projections conservative and not over-ambitious.

How OD Loan Gets Evaluated in Bank Credit Policy

OD loan is not like term loan.

It works like a credit line.

Interest is charged only on used amount.

But banks still assess full limit for repayment ability.

OD is given for working capital needs.

So, usage pattern and cash flow cycle is important.

For doctors, OD is generally accepted for clinic expansion, pharma stocks, etc.

Hence, project use-case of OD properly.

Show Realistic Utilisation Plan of OD Facility

Say Rs.10 lakhs will be used for clinic renovation.

Rs.5 lakhs for equipment.

Rs.10 lakhs as contingency buffer.

Mention timeline for usage.

Share estimated income improvement after investments.

Show Collateral Strength Clearly

Get professional valuation of land by certified valuer.

Attach land title deed and encumbrance certificate.

Bank likes clean, marketable land title.

Avoid agricultural or disputed lands.

How to Handle if Bank Offers Lower OD

Sometimes, bank may offer Rs.20 lakhs only.

Ask for enhancement clause after 6 months.

Request OD renewal based on next ITR.

Show improved income next year.

Boost Loan Approval Odds with These Steps

Keep all EMI payments regular.

Avoid bounced cheques in savings account.

Maintain Rs.1 lakh average balance in account.

Get credit report with CIBIL score above 750.

Use professional CA for documentation.

Avoid These Mistakes in Loan Projection

Don’t show sudden jump in income without logic.

Avoid overestimating clinic profits.

Don’t hide liabilities or other EMIs.

Avoid giving false patient inflow data.

Keep records consistent across documents.

360-Degree Insights for Future Planning

Maintain clear separation of personal and clinic expenses.

File ITR on time with correct disclosures.

Use accounting software to track income.

Avoid mixing professional and other incomes.

Build a credit track record with smaller loans first.

Consider a small term loan instead of OD, if rejected.

OD is ideal for cyclic income professionals.

Don’t take OD to invest in stocks or mutual funds.

OD should be linked to business expansion.

Other Tips as Certified Financial Planner

Build an emergency fund separately.

Keep medical insurance updated.

Take professional indemnity insurance if not done already.

Use OD only when needed.

Don’t keep OD usage at peak always.

Pay interest monthly to reduce charges.

Show good credit behaviour to boost future limits.

Finally

Rs.25 lakh OD is possible with Rs.35 lakh land, but only if income supports.

The doctor must project at least Rs.18 lakhs income in estimate.

Net income should be shown above Rs.9 lakhs.

Maintain transparent records.

Keep land documents clean and ready.

Make usage of OD clear and linked to profession.

Bank will evaluate from both property and income side.

Be realistic in income estimates.

Don’t overstate or hide any facts.

With right documentation and projection, OD loan can be approved.

As a Certified Financial Planner, I suggest staying conservative in assumptions.

Focus on building long-term credit profile.

Avoid frequent withdrawals from OD account for personal use.

Stay disciplined in usage.

Reassess financial health annually to avoid debt stress.

Keep improving financial literacy to manage credit better.

Wishing the doctor a financially strong practice and smooth credit journey.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment