Documents required to get a business loan

A handy checklist for business loan applications

by Swati Bucha on 15/02/2017
If you are starting a business (selling or otherwise), you may require a business loan. A business loan can help you with the capital required to get your business up and running. If you already have a business set up, it can help you expand your business or mitigate the tight financial situation you’re in. To get a business loan, first, you need to keep all the necessary documents required ready.

Here’s an indicative list of the mandatory documents that you’ll probably need to get a business loan. Please note that the below lists are provided to you for information purposes only and may vary depending upon the requirements of the financial institution to which you apply for a loan:

Personal Identity Proof

Documents that are a valid proof of your identity include; Permanent Account Number (PAN Card), Valid Indian Passport, Voter Identity Card, Aadhaar card or a Driving License.

Personal Address Proof

Documents that can be used to confirm your address are Electricity bill, Bank statement, Aadhaar card, Valid Indian Passport or a Voter Identity Card.

Proof of Continuity of Business

A Certificate of continuity issued by the Bank can be considered as a valid proof of the continuity of your business.

Income Proof

A. Bank Statement for last 6 months from the Operating Account
B. Income Tax Return & Statement of Computation of Income – for last 2 years

Turnover Proof

The latest service tax returns can be considered as a turnover proof.
Balance Sheet and Profit & Loss account audited or certified by a Chartered Accountant – for last 2 years

Ownership Proof of Residence or Office

Any documents for proof of the office you are using, and your place of residence

Other than the above mandatory documents, below is the indicative list of documents that may be required exclusively for:

Income Proof

A Certificate of continuity issued by the Bank can be considered as a valid proof of the continuity of your business.

Private Ltd. Co. and Partnership Firms:

Sole Proprietor Declaration or Certified Copy of Partnership Deed
Certified true copy of Memorandum & Articles of Association
Board resolution (Original)

Individuals; Sole proprietors, Partners & Directors

Sole Proprietor Declaration or Certified Copy of Partnership Deed
Certified true copy of Memorandum & Articles of Association (certified by Director)
Board resolution (Original)

Aside from the above documents, you may also be required to have certain things ready before even starting the application process:

Application form: The business loan application form might vary by the lending institution.

Resumes: Certain lenders require a proof of business experience so, a resume might be useful.

Business Plan: A sound business plan inclusive of a projected financial statement, cash flow statement, profit and loss account, and the balance sheet is required.

Business Credit Report: It is a source of information for individuals and companies that are seeking to get a business loan. Banks or creditors would validate your business report to see if they can grant you a loan and how much.

Income Tax Returns: Income tax returns for the previous two years are also required.

Financial Statements: You may be required to submit projected financial statements (Can be separate or a part of your business plan).

Accounts Receivable and Accounts Payable: To know the current financial position, a lender may require you to produce accounts receivable and accounts payable report.

Collateral: Lenders may/may not require collateral, but to be on the safer side it is good to prepare a collateral document.

Legal Documents: Depending on your loan requirements, you may be asked to submit below legal documents:
1. Articles of Association
2. Business licenses & registrations
3. Copies of contracts (if any with the third parties)
4. Commercial leases
5. Franchise agreements

The above list will help you satisfy some of the business loan requirements. Once these documents are in place, you can apply for a business loan. It is advisable to make sure that the required documents are accurate. Any inaccuracy might hurt your chances of getting a loan approved. All the documents that you provide will be verified by the lender and if everything goes well a loan for your business might be granted to you. Good luck!

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