How To Get A Business Loan On An Aadhaar Card

Do you know that you can get a business loan on an Aadhaar card? Applicants can now get a business loan of up to Rs. 1 crore using the Aadhaar card within just 48 hours. Interest rates start from as low as 1.33% per month. 

The Aadhar is an unique identification system that has details like your name, date of birth, residence address, photo, and biometric prints on their UIDAI database. It is also linked to your bank accounts, PAN number, and mobile number. Thus, the Aadhaar can be used by lenders as a single point of verification to establish the correct identity. Due to this all-in-one nature of the Aadhaar card, the paperwork for a loan application is minimal. 

A Quick Snapshot Of A Business Aadhaar Loan 

Criteria For Applying For A Business Aadhaar Loan 

What are the prerequisites? 

• The Aadhaar should be linked with the Permanent Account Number or the PAN. 
• The Aadhaar should be linked with your bank accounts, both personal and business
• Your mobile phone should be linked to the Aadhaar number. 
• Though not compulsory, it is recommended to link your Aadhaar number with other identity documents like voter ID, ration card, LPG connection, etc. just in case a second line of reference checking is needed. 

Eligibility Criteria For A Business Loan on Aadhaar Card

• Monthly Business Turnover: The monthly business turnover should be at least Rs. 2,00,000/-
• Age of the Business: The business must have been operative for 1 year plus from the date of registration 
• Type of Firm: Sole proprietorship firms, small individual corporations, and private companies in manufacturing, trading, or providing services can apply for a business aadhaar loan.
• Age of the applicant: The applicant should be above 21 years and below 65 years. 

Documents Required For An Aadhaar Business Loan 

• PAN card
• Aadhaar card
• Bank statements for the last 6 months of all the business accounts
• GST registration certificate
• Shop and establishment certificate
• Photograph

Key Benefits of A Business Loan on Aadhaar Card 

Single Point of Verification:

Aadhar card is linked to other identification proofs like the PAN card and various other bank accounts. So, it single-handedly provides access to all the information from the PAN Card, bank accounts, mobile number, and voter card. So, verifying this UID suffices for the lender. 

Reduces Loan turnaround time:

Verification, approval, and disbursal of the loan are fast. 

Minimal Documentation:  

Since the Aadhaar is linked to other document proofs and bank accounts

Tax Benefits:  

• Interest component of a business loan is tax deductible: According to the income tax rules, the interest component of a business loan is treated as a business expense, thus making it eligible for a tax deduction. Thus, when finalizing the tax return for your business, the interest paid on loan repayment should be deducted (along with other permitted business expenses) from the gross income. You should keep in mind that the principal amount of a business loan from an Aadhaar card is not applicable for tax benefits. 
• EMI-based repayment options eligible for tax benefits: EMI-based repayment is eligible for tax only with clarification. That is, a separate declaration from the lender specifying the interest is essential. You have to keep a close track of your Aadhaar card loan details when choosing the EMI option. 
• Interest on all types of business loans is tax deductible: Interest on term loans, working capital, bill discounting, equipment finance, or simple small business loans is tax deductible. 

Where Can You Apply For A Business Loan?

Although banks are a secured and reliable source of funding, the loan turnaround time is very long. The documentation process is also cumbersome since multiple documents have to be submitted and verification also takes time.  

In such a scenario, you can get business loans from online lending platforms. Finserv platforms like CreditMantri help you choose from a pool of lenders according to your requirement. CreditMantri provides a completely digital process with minimal documentation. 

Some Business Loan Lenders - Features

• M Capital Business Loans 

• Flexi Loans 

•  LendingKart Business Loan

• Manappuram Business Loan 

Simple Steps To Apply Online For Business Loans 

You can apply for a business loan on CreditMantri via the following simple steps. 

Step 1: Visit Business loan category  

Step 2: Choose the business loan that suits your needs by reading the details. 

Step 3: Post deciding, click “Check Eligibility”. If there is no Check eligibility, click On know more. You will be redirected to the page that contains all the information about the loan. Read the details about the loan and go to the lender’s website to apply. 

Step 4: Enter the details asked like the Email ID, residence city, date of birth, current residence in years, mobile number etc. 

Step 5: Click Submit. 

Step 6: An OTP will be sent to your mobile. 

Step 7: Enter the OTP for verification 

Step 8: Proceed with the rest of the application. 

What Are The Factors That Influence Your Aadhaar Business Loan Application?

• A Good Credit Score: 

Having a good credit score is an important factor. Banks look at the individual’s personal credit score to sanction a business loan. Generally, lenders prefer to sanction business loans to people with a credit score of over 720. But, nowadays, there are private NBFCs which give business loans for credit scores starting from 500. So, small business owners with low credit scores generally prefer private NBFCs over traditional lending institutions like banks. However, it is always recommended to maintain a good credit score as it eases the loan approval process. Timely repayment of dues, transparency in transactions, and invoicing of every purchase with dealers are few things that can help you build a good credit score. 

• Financial standing of the business: 

Lenders will look for consistent cash flow, sound accounting practices, and the level of financial reserves.

• Loan Amount: 

The loan amount requested should be in line with the financial status of the business and the purpose for which you are taking the loan. High amounts may be turned down while low amounts may not fulfill the purpose of taking the loan. The loan amount should match the financial needs, anticipated benefits, and future cash flow estimates. An application quoting a loan amount in line with all these will be approved easily. 

• Specify the end usage purpose of the loan: 

The end usage purpose of the loan should be specified because lenders evaluate your application and financials against this. Amounts are sanctioned according to whether you are going to use the loan for expansion, renovation, productive investments like buying a piece of equipment with cutting-edge technology, or promoting your business. 

• Business Plan: 

Your business plan states the vision, purpose of the loan, and other factors. An impressive business plan will help you in easy loan approval. 

Business Loan EMI Calculator

Before applying for the business loan, decide the loan tenure and the loan amount for the business loan. Compute your EMIs accordingly by entering the loan tenure, loan amount, and the interest rate in a business loan EMI calculator. The calculator shows the EMI amount instantly. Lenders generally tend to approve business loans that have a realistic projection for the loan amount, tenure, and EMIs based on the current financial standing, growth, and income prospects of the business. This is because they can then be confident that you will be able to repay the business loan on time. 

Conclusion

When you submit your Aadhaar as a KYC document, multiple verifications can be done through one document and this reduces the time taken between applying the business loan and disbursal of the loan. Thus, getting a business Aadhaar loan is highly convenient. 

FAQS of How to Get A Business Loan On An Aadhaar Card

1. What Are The Repayment Options For Business Loans With Aadhaar?

The repayment options for business loans with Aadhaar are flexible and customized according to your business requirements. 

2. What is an Aadhaar Cash Loan?

You can get an instant loan on an Aadhaar card up to Rs. 50 Lakhs at the rate of interest starting from 10.50% per annum (8.35% per annum for government banks) and for a tenure of up to 5 years. The loan can be availed online with ease and with minimal documentation.