Is PAN card mandatory to get a business loan?

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YES! Any financial transaction executed in India between an investor and a borrower, be it an individual looking for a personal loan, a business owner looking for a business loan, a student looking for an educational loan, or a potential house owner looking for a home loan, is based on his/her credit history and credit scores. Buddy Loan offers such business loan with potential benefactors. 

And these credit scores are linked to what we commonly refer to as the PAN. The Primary Account Number is a unique identification number assigned to every taxpayer in India. All tax-related records are linked against this single Identification number. 

Although Aadhar has now taken over most of these roles, the PAN card remains an essential piece of documentation that is required for almost all finance-based decisions.

Let us have a quick look at what documents are required for applying to a business loan.

Documentation:

Buddy Loan has a varied range of investors, depending on the borrower’s requirements. Although documentation may vary from lender to lender, it spans in and around the following list.

1. Identity proof (Aadhar Card, Driving License/PAN card/Passport/Voter ID)
2. Address proof (Electricity bill/Telephone bill/Passport/Trade license/Lease agreement/Sales Tax certificate)
3. Income proof (Bank statements ranging from 3 months to two years, depending on the lender’s requirements)
4. Financial documents (ITR for the past two years along with balance sheets, Income and profit & loss a/c)
5. Business Ownership proof (For existing business owners only. This is not applicable for startup financing seekers)

Although documentation requirements vary from lender to lender, the PAN is a staple across the financial world due to its ease of accessibility. And as most of these transactions are electronically processed, it is always a better option to have a PAN card, if not mandatory.

If you do not have a PAN, you can always apply for one online. Once you complete your documentation, the PAN card is usually dispatched within 15 business days to your registered permanent address. Another way of going about it is to visit any government-authorized agent and get one issued to you. 

Having said that, there are other ways one can go about applying for a loan. Here are some of them.

·         Ensure you have a good credit score. The average score ranges between 700-900, 700 being the average, and 900 being the highest. 

·         Bank statements and ITR returns can help investors track your financial activities in the absence of a PAN.

·         A healthy relationship with your banks helps you qualify for loans.

Loans are simply disbursed based on address proofs, financial activity, and your ITR returns. However, citizen responsibility dictates you have a PAN. With Buddy Loan, find the best-suited investor for your needs, and make full use of the online documentation option, with a range of alternatives to make your experience of applying for a business loan sweet and hassle-free.

Happy financing! 

Is Form 16 required for a business loan?

Nowadays, with the government deciding to encourage small business growth in the country, individuals are encouraged to apply for small business loans. Avail a business loan through best of loan aggregators that help your credit score, lower interest rates and more with Buddy Loan.

Business loans can be unsecured business loans or secured business loans. Getting a small business loan has gotten much easier than in the past. Even a buddy loan can be availed for hassle-free borrowing.

One can apply for a small business loan through banks, i.e., the offline mode, or in case one prefers the easy, convenient mode, online business loans are also available. 

Various schemes with secured business loans (loans backed with some sort of collateral as security) as well as unsecured business loans (loans not backed with some sort of collateral as security) are available with banks as well as through online loan agencies. 

Applying for a business loan online is easy with the facility to upload documents online and the maximum turnaround time offered by many institutions in twenty-four hours. Some types of online loans are also approved instantly. 

Several documents are required when applying for a business loan.

The Credit Score is an essential document in that any lender, whether a bank or an institution providing online loans, will check the Credit Score to understand the credit history as well as the pattern of repayment. This is especially important in assessing the repayment potential of the borrower.

The age of the business, i.e., the number of years that the business is in operation, will be taken into consideration to check the stability of the business. 

The potential collateral that can be offered will also be considered in case of a secured business loan. The end use of the funds, i.e., the purpose for which the funds will be used, will also be taken into consideration. 

Although it is possible in theory to get a hundred per cent loan for starting a small business, most banks and financial institutions are wary of providing the same and prefer to give part-funding with some capital that is self-funded by the owner(s) of the small business.   

In most circumstances, it is the salaried people who want to start a small business to increase earnings and get the freedom to work in fields and areas they enjoy, as per their convenience. In such circumstances, banks and financial institutions may request Form 16 as evidence of past earnings.

Form 16 is a form that is to be mandatorily issued by companies and organizations to individuals who have worked in their organization, irrespective of any TDS (Tax Deducted at Source) deduction from the salary of the employee. Therefore, Form 16 serves the dual purpose of checking the employment status and stability of finance of the individual along with the income potential of the individual.

In case the business loan is taken through the route of a personal loan, Form 16 is asked by almost all banks and financial institutions. This is done to understand the level of income of the individual and the ability to repay the loan.

 Loans taken where the EMI (equated monthly instalment) is of a greater proportion to the income would mean that the ability to repay is reduced in certain circumstances. Banks and financial institutions prefer to have certain ratios when it comes to the income potential as well as the EMI (equated monthly instalment). This is the area where Form 16 is of great help to banks as well as financial institutions.   

Is Aadhaar card mandatory for a business loan?

When one does decide to opt for a business, one of the first things that come to mind is, Do I apply for a business loan? Do banks provide small business loans? Is it possible to get an unsecured business loan online? Can I avail of a buddy loan where a business loan can be availed hassle-free? all this and more benefits can be crossed using Buddy Loan. Avail a business loan with Buddy Loan, now! 

One of the first thoughts that comes to mind is the formalities that need to be completed as part of the process to avail of a business loan. 

There are certain KYC (Know Your Customer) requirements as well. Whether applying for a loan online or whether one decides to go to a bank or a financial institution and undergo the physical process of the offline application, it is mandatory by law as enacted by the government to collect certain KYC (Know Your Customer) documentation.

Banks and financial institutions are obligated by law to collect such information as well as to keep the said documentation updated from time to time.

Various documents can be considered as eligible to be considered as eligible or valid KYC (Know Your Customer) documentation. Some such documentation would include Passport, Voter Identity Card, Driving License, PAN Card, NREGA Card as well as Aadhar Letter/Card. 

The KYC (Know Your Customer) documentation is required as proof of identity as well as proof of address/residence. Anyone document is allowed, and Aadhar Card is not mandatorily required as a KYC (Know Your Customer) document.

However, before 2018, many or almost all banks and financial institutions into a document made Aadhar Card mandatory in order to open accounts as well as to avail loan facilities with them as per the directives of the Government of India.

The Aadhar Card was sought to be made into an identification document that is similar to the Social Security Card in the United States of America. Therefore, to avail of loans either offline or through the online mode, Aadhar Card was a mandatory document without which, the loan was liable to be rejected.

However, according to the judgment given by the Hon’ble Supreme Court of India, banks may use the Aadhar Card as a KYC (Know Your Customer) only in case the customer consents to its usage. The Reserve Bank of India has also issued such clarification in light of the decision given by the Hon’ble Supreme Court of India.  

However, even though the Aadhar Card is not a mandatory document, it can be said to be a comprehensive document, in that it includes the name, address as well as the fingerprint information of the individual and therefore, the process of verification via the electronic mode is faster and cheaper.

Banks have an E-KYC process where KYC (Know Your Customer) verification has been digitalized. In such a scenario, even though Aadhar Card is not mandatorily required, it does speed up the verification process and enables faster processing of the business loan. Even financial institutions prefer the Aadhar Card for faster verification, whether the loan is sought through the online or offline mode.

In case a loan is sought through the online mode, it is even possible to get an instant business loan online in case Aadhar Card is uploaded as a KYC (Know Your Customer) document as the identity verification can be instantly done, and the KYC (Know Your Customer) process can be instantly completed because the identity of the borrower can be instantly verified through the e-verification process.

Aadhar Card, are mandatory KYC (Know Your Customer) document, it is still the most preferred document in terms of the ease of use and verifiability. 

How does a business loan work?

A business loan is an amount that you borrow from the lender so that you can start a business or so that you can grow an existing one. One such loan aggregators include Buddy Loan, that aid your credit score and add more benefits.  

Before you apply for an online business loan, you need to evaluate how much you need and what are the rates you are being charged.

How to Apply for Small business Loan

When you apply for a business online, it is simple, hustle free, and quick. You no longer need to visit the physical office to be able to make an application. You will, however, need to check through the providers of the loan and evaluate which provider fits your bill. Once you are comfortable, then you need to ensure that you have the right documentation to apply for the unsecured business loan. If the documentation is right, then waiting for your sanction letter.

When applying for your instant business loan online, you need to make sure your documentation is right, and your credit score is safe. This way, your business loan application will pass by the verification stage quickly, and the money will be credited into your account.

SME business loans may be categorized as short term loans or long term loans. The loans may also be divided into secured loans or unsecured loans. 

Professional Loans

Professional loans are extended to self-employed professionals such as chartered accountants, doctors, and lawyers, based on their credit history. It also varies from one bank to another as to how much loan amount can be extended to the professional and his/her trade relationship with the bank. 

Trade Loans

Type of businesses that can apply for Trade Loans are:

• Sole Proprietorships
• Partnerships
• Private Limited Companies

Trade Loans mainly comprises three types:

Overdraft

Working capital

Term loan

Overdraft

These loans are based on some securities or collateral, especially in terms of bank deposits. This loan can be utilized by the customer as long as the interest is paid on time. The bank uses the client’s relationship to analyze how much they should get.

Working Capital Loan

This loan has lower interest and is given to the business to keep them operating. It works like an instant business loan.

Term Loan

Term loans are the standard type of small business loan that is for businesses purposes. When you apply for the business loan, the entire amount in a term loan is disbursed, and EMI is based on a specified pre-defined tenure.

How can I repay my business loan?

Repaying my Business Loan

As lenient as business loans maybe, a bounced check or a defaulted payment can lead to a bad credit score, which in turn might lead to negative reviews while applying for future loans. Look no further than Buddy Loan, as it offers the best interest rates on business loans. 

However, if planned immaculately, just as is the case with any loan, your credibility improves by leaps and bounds, allowing for easy and trustworthy transactions in the future.

But how? 

Let us find out.

How can I repay my business loan?

There are multiple ways you can pay off your business loans. Here are some tips for planning your resources accordingly. Albeit every loan comes with its own “expiration date” and repayment terms, you need to understand the strings attached to make sure your business complies to the norms set by the lender/investor

1.   Understand the terms and conditions.

Before signing a contract, a borrower must understand the agreement. Many business owners, due to lack of options, jump right in and sign contracts out of desperation, which should never be encouraged. You are under no obligation to accept a contract even if it detrimental to your business.

2.   Keep the investors in the loop when dark times loom ahead.

If you can forecast dark times and know you will not be able to make your payments on time for a certain period, informing your investors about this sickness is of the essence.

3.   Pay on time

As a rule of thumb, make sure you have sufficient funds to make your payments. Most term loans come with monthly payment options, so make sure you have set aside funds dedicated to paying off your loan.

4.   Keep an eye on your cash flow and credit scores

If you have an inconsistent cash flow, you will have a hard time paying off your debts on time, ultimately leading to a bad credit score. Make sure you have a steady cash flow to cover financial flaws.

5.   Foreclosing a business loan

There always comes a time when you believe you are capable enough of paying off your entire amount in one go, which I called foreclosure. Make sure you plan your foreclosure so as not to lose money. Loans usually work off your interest in the first year; hence, foreclosing in the first year is not a good idea as you will be paying the interest as well as the principal amount.

Buddy Loan helps you keep an eye out for all such issues. With Buddy Loan, find the business loan that complies with your requirements and matches your ability.

Happy financing! 

What Are The Benefits of a Business Loan

Benefits of Business Loan

Why business loans make sense?

Business, as we know it today, has evolved from just being a corner shop run by a family to sophisticated pillars of society run by a body of investors and owners sharing risks and profits, contributing to the world economy, and in return, garnering trust and credibility. Business loans are best offered at Buddy Loan, know more benefits about your financing.

 And just like any sector, to grow and expand, a business needs a business module, and a business module can only be set in motion with financing. This is where business loans come in handy.

What are business loans, and how do they help?

A business loan is a type of loan optimized and intended for business plans. And as it is with all kinds of loans, a business loan lender creates debt, which is then repaid by the borrower with added interest agreed upon by both parties before the loan is sanctioned. Be it to buy machinery, or to expand your business; business loans cater to the needs of a businessman.

There are many types of business loans available depending on a borrower’s requirements and eligibility, some of which are listed below.

1. Bank loans.
2. Mezzanine Loans or Mezzanine financing.
3. Asset-based loan Invoice based loans.
4. Small business financing (Also called startup financing)

Benefits of business loans.

Unlike “bad credit” loans like personal loans, the pros of applying for a business loan outweigh the cons. Let us have a look at some benefits a business loan applicant is entitled to.

1. Convenient and accessible: Applying for a business loan today is no mountain climb is you have a good credit history. There are hundreds of options available in the markets today.
2. Multiple options: We now know a business loan application is not limited by the choices available to him/her. The borrower can opt for the option best suited for his/her business needs.
3. Flexible repayment options: Business loans are designed in a way so as not to hamper the current business module of the borrower. 
4. Hassle-free business loan application process: These loans are so easily disbursed, a borrower need not run around in circles and can apply for a business loan online unlike the old traditional ways.
5. Instant approval: Business loans are usually disbursed within 24 hours, depending on the amount the borrower has applied for. Even so, a borrower does not have to wait for days to get his/her business loan approved.
6. No collateral required: This, of course, depends on the type of loan a borrower has applied for. Unlike mezzanine loans or asset-based financing, most business loans do not require collateral or mortgage. 

And to top it off, business loans are easily accessible through Buddy Loan. With low-interest rates and flexible payment options, Buddy Loan makes sure your business grows to great heights.

Documentation:

Buddy Loan has a varied range of investors, depending on the borrower’s requirements. Although documentation may vary from lender to lender, it spans in and around the following list.

1. Identity proof (Aadhar Card, Driving License/PAN card/Passport/Voter ID)
2. Address proof (Electricity bill/Telephone bill/Passport/Trade license/Lease agreement/Sales Tax certificate)
3. Income proof (Bank statements ranging from 3 months to two years, depending on the lender’s requirements)
4. Financial documents (ITR for the past two years along with balance sheets, Income and profit & loss a/c)
5. Business Ownership proof (For existing business owners only. This is not applicable for startup financing seekers)

If you are looking for a business loan, look no further into Buddy Loan.

Happy financing!

How does prepaying help in repaying my business loan?

Business Loan Online

Business loan or Buddy Loan is the lifeline of the small and medium business owners in India as it gives them the capacity to revamp, reconstruct, and expand their business. Many banks and financiers in the market provide easy business loans with less documentation with a fixed tenure to the borrowers. Once the loan is availed, the borrower has to understand the repayment mechanism to the financer. Equated monthly instalments or EMIs' is a term known to everyone and is the way of repayment to the lender. 

Business loan keeps going for a fixed number of years. In any case, if a borrower chooses to reimburse the credit before the tenure end, the bank can't gain the premium that was fixed at the hour of advance processing. Thus, the loan specialists charge a prepayment expense on the prepayment.

Even with the lender asking for a prepayment charge, it is monetarily beneficial for the borrower to make a prepayment in parts or in full in the early years of the loan tenure. 

Prepayment charges

The prepayment charges in SME advances differ from lender to lender. On the off chance that you are pre-covering the advance also called advance fore-closure, the prepayment expense will be around 4% of the outstanding principal amount, and the part of the principal paid back to the lender in the last 12 months.

In the event of part prepayment, a few banks don't charge any expense on if you are pre-settling up to 25% of the outstanding principal amount. Goods and services tax is also levied on the prepayment charges as applicable.

How is prepayment beneficial?

It is advisable to check with your bank or financer at the start of the loan about the prepayment charges and other terms and conditions involved. The preclosure and prepayment details are also mentioned in the proposal form shared by the bank with the borrower. One should read it in detail and check with the lender if there is an ambiguous term involved. Moreover, it is an excellent choice to prepay your loan as it removes the burden one carries during the tenure of the loan.

Prepayment can help you save a considerable amount of money if you do it the right way. As mentioned above, try to prepay the loan as early in the loan tenure as possible to save most on business loan rates.