How PAN Card Is Helping To Get A Business Loan Quickly
Get your business loan approved faster with a PAN card. Learn how a PAN card acts as a key identifier for your business, helps verify financial details, and increases the likelihood of loan approval!
Every small business needs money from time to time. They could need the money to meet working capital requirements or to pay wages or even to buy raw material or plant and machinery.
A business loan is essentially credit—collateralized or collateralized—which can be used by an enterprise for any business purpose.
While approving a business loan application, lenders typically require several documents including bank account details, address and identification proofs, incorporation documents of the company as well as its balance sheet and profit and loss statement.
Apart from all of these, one other crucial document that is needed is the borrower’s PAN card—both the borrower’s personal as well as that held in the name of the company that is actually availing the loan.
What Is A PAN Card?
The PAN card is issued by the income tax department. PAN is short for Permanent Account Number. The PAN is a ten-character alphanumeric identifier issued to individuals and business entities who are required by law to pay taxes. No person or business entity can have more than one such card. Also, it is a unique number and no two people or businesses can have the same PAN number.
The PAN card is a physical card that mentions the PAN as well as the individual name, date of birth, father’s or spouse’s name, and photograph. Copies of the PAN card can be submitted as proof of identity or date of birth. But the PAN card doesn’t mention the address, so it can’t be submitted as proof of address.
Apart from an individual, typically the following entities have PAN cards:
• Private and public limited companies
• Hindu Undivided Family (HUF) trusts
• Limited liability partnerships
• Charitable and other trusts
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How Can A Business Get A PAN Card?A business entity can get a PAN card in two ways, by applying for it online or offline. A business PAN card can be applied for offline in the following steps:
• Obtain and fill out form 49A
• Attach supplementary documents such as address verification or a registration certificate
• Submit the documents at the local NSDL facility
• Track the status of the application by using the NSDL acknowledgement number
• Once the application has been processed, the PAN card is delivered to the company address by post
Importance Of PAN Card
The information from the PAN card is used not only to verify the identity of the borrower but also their credit history as part of the know-your-customer (KYC) process.
A PAN card allows a lender to access the borrower’s tax details so as to be able to assess their credit history, details of past loan repayments or defaults and other such information. In fact, even the credit bureaus that determine one’s CIBIL score, also pull out details from the borrower’s PAN number.
It is for these reasons that both the borrower’s personal PAN card as well as that of their company become relevant while applying for a business loan. This information can help the lender determine if the borrower is financially sound or if he or she can be a credit risk.
The details gleaned from a PAN card and the overall credit profile of the borrower and his or her business will help determine whether the loan application is approved or not. Even if it is, a lower credit score and a less than satisfactory credit history will translate into a higher rate of interest. On the other hand, a good credit score and an impressive credit history will mean that the borrower can get the business loan at a much more competitive rate.
A business PAN card is a not only a useful tool but also an important document when it comes to applying for a business loan.
While having a business PAN card makes the application process easier, you must make sure that you approach a well-known and reputed lender like IIFL Finance that can offer you the most competitive interest rates in the market. IIFL Finance offers both secured and unsecured loans to businesses to help them sustain and grow their operations.
Moreover, IIFL Finance has robust systems in place that make sure that their business clients receive the best services possible and that the entire process—from application to approval and then from disbursal to repayment and finally closure of the loan—becomes hassle free.
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