Aadhaar and Business Loans - How Are They Connected?

The Indian government issues numerous identification documents, such as Voter IDs, Driving Licenses, and more. However, after the introduction of Aadhaar Cards, the Indian credit segment has become deeply incorporated with the ease and transparency the document provides. Similarly, when taking a loan for business, lenders prefer individuals with Aadhaar cards to supply the adequate loan amount to cater to their business needs.

But how are loans for businesses and Aadhaar cards connected?

What Are Business Loans?

Business loans are a form of business financing offered by financial institutions. They allow entrepreneurs to raise immediate capital to cover numerous business activities, including rent, employee salaries, working capital, expansion and marketing.

Quality lenders offer loans to business owners on flexible loan terms, such as no requirement to pledge an asset as collateral and the loan disbursement within 48 hours. However, like other types of loans, the lender requires the borrower to repay the principal amount with interest within the loan tenure.

Business Loans And Aadhaar Card: The Connection

Aadhaar is a 12-digit individual identification number issued by the Unique Identification Authority of India on behalf of the Government of India. The number serves as proof of identity and address anywhere in India. Since the Indian government issues it after a prior review of an individual's identity, it has become one of the most influential documents for lenders to ensure transparency in the loan offering process.

Now, the Indian government requires the following:

• Compulsory linking of the Aadhaar Card to personal or business loan accounts
• Mandatory linking of an Aadhaar card to an individual's Permanent Account Number (PAN)
• Mandatory linking of the Aadhaar card to an individual’s mobile number
• Optional linking of the Aadhaar card to other documents such as a Ration Card, Voter ID, etc.

With the Indian government integrating the Aadhaar card into most financial and identification services, it has become a one-stop document for completing the mandatory KYC process. Lenders are now utilising the Aadhaar card as a convenient document for providing an Aadhaar business loan.

An Aadhaar finance business loan offers funds to individuals with a valid Aadhaar card. Since the Aadhaar card contains all the necessary information lenders require of a borrower while filling out the loan application form, they prefer a borrower to have an Aadhaar card for faster review and approval. When you link all the proof documents with the Aadhaar card, it is easier for lenders to verify the Aadhaar business loan.

Benefits Of Linking Aadhaar Card For Taking Business Loans

Linking your Aadhaar card to various government-issued documents and your mobile number is imperative, especially if you want to attain business financing through an Aadhaar business loan.

Here are the benefits of linking your Aadhaar card if you want to take a business loan:

• Faster Loan Approval:

When you apply for a business loan, lenders review your loan application to ensure that you have entered all the correct personal information. However, examining the information you have entered may become time-consuming for the lender, delaying the loan approval process. Through an Aadhaar card, the lender gets all the needed information, resulting in faster loan approval.

• Transparency:

Having an Aadhaar card linked with other government-issued documents showcases trustworthiness to the lender, where they realise you have nothing to hide in terms of your identity and financials. Hence, the resulting loan process for business expenses is transparent, and the loan terms are more flexible than those with no documents like Aadhaar.

Eligibility To Apply For An Aadhaar Finance Business Loans

If you have an Aadhaar card linked with other government-issued documents, you can apply for an Aadhaar business loan. However, you must fulfil the below-mentioned criteria to fulfil the approval process.

• Established business operating for more than six months at the time of application
• Minimum turnover of Rs 90,000 in the last three months from the time of application
• The business does not fall under any category or list of black-listed/excluded businesses
• The office/business location is not on the negative location list
• Charitable organisations, NGOs, and trusts are not eligible for business loans

Documents Required For Taking An Aadhaar-Based Loan For Business

Here are the documents Proprietorship, Partnership and Pvt. Ltd/ LLP /One Person Company will need to submit to complete the loan application:

1. KYC documents – Identity proof and address proof of the borrower and all co-borrowers, including the Aadhaar Cards
2. PAN Card of the borrower and all co-borrowers
3. Last (6-12 Months) months’ bank statement of the main operative business account
4. Signed copy of standard terms (term loan facility)
5. Additional document(s) for credit assessment and processing the loan request
6. GST Registration
7. Previous 12 months’ bank statements
8. Proof of business registration
9. PAN Card and Aadhaar Card copy of the Proprietor(s)

Avail Of An Ideal Business Loan From IIFL Finance

IIFL Finance offers varying financial services focused on customised and comprehensive business loans. We provide instant funds up to Rs 30 lakh with a quick disbursal process online and minimal paperwork. The loan’s interest rate is attractive and affordable to ensure the repayment doesn’t create a financial burden. You can apply for the loan online or offline by visiting IIFL Finance nearest branch and verifying your KYC details.

FAQs

Q.1: Can I take an Aadhaar Based Loan from IIFL Finance?
Ans: Yes, if you have an Aadhaar card linked to all the government-mandated documents, you can take an Aadhaar-based loan from IIFL Finance.

Q.2: What is the loan tenure for IIFL Finance business loan?
Ans: The loan tenure for an IIFL business loan up to Rs 30 lakh is five years.

Q.3: What is the mode of repayment for IIFL Finance Business Loans?
Ans: You can repay through Electronic Clearance Service (ECS) or Direct Debit facilities.