What Are Documents Required for Business Loan and Why: Do you have a profitable business but are stuck with no capital? If that’s the case, loans are ideal for growing your business. In addition, you can use Business Loans to increase financing for multiple business requirements.
Several NBFCs offer you an unsecured Business Loan to meet the financial needs of your business. In addition, these loans come with a flexible repayment period to eliminate pressure on your monthly budget.
Are you a sole proprietorship, private limited company, or closely-held non-listed company offering services or in the trade and manufacturing sector? You can get Business Loans without looking at the size of your business.
To apply for a business loan is a simple and easy process when you have all the required documents. However, you must provide accurate information and documents to approve your loan. You can eliminate loan processing delays and chances of rejection when you submit the right documents required for a Business Loan.
Essential Documents Needed to Get a Business Loan
1. Duly filled Business Loan Application Form
You should have a profitable business, business existence proof, one-year, or more, GST returns, audited financial statements and a healthy personal credit score to meet the new Business Loan eligibility criteria.
Once you’re sure you meet the criteria, you should submit a duly-filled form showing your details and the loan amount you want. Ensure you provide correct personal information to avoid loan application rejection due to incorrect data.
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2. Proof of Your Identity
As a loan applicant you are required to submit proof of your identity. When applying for a Business Loan, you can use your Passport, Voter ID and/or Aadhaar Card as proof of your identity. Several NBFCs also accept PAN cards as your identity proof.
3. Address Proof Documents
Do you have a physical location or residence where you operate your business? Then, you’ll be requested to submit a driving license as proof of address. Apart from driving license, you can also be asked for utility bills such as electricity, gas connection, telephone, water or broadband bill.
4. Bank Statements for The Last Six Months for Existing Businesses
Your Bank statements are crucial when applying for a Business Loan. Before extending credit facilities, NBFCs review your business bank account statements to prove the legitimacy of your business. In addition, financial records help predict your future cash flow expectations, determining your ability to repay your Business Loan once approved and disbursed. If your business is operating, your financial statements should indicate your business earns revenue actively while managing expenses healthily.
5. Credit Report
To get access to more capital, you should demonstrate the history of paying your loans. A good credit score indicates you can repay the principal amount and the interest rates once your loan is approved. You get a credit score depending on your credit report. The data in your credit report includes past payment information regarding loans and credit cards. If your credit score is 670 and above, you can get a good Business Loan deal with reputed lending institutions. You can work to improve your credit score by paying your bills timely. Remember, a lower credit score can lead to the rejection of your loan application. So check your credit score regularly, and correcting any errors on the credit score report keeps your score higher, increasing your loan eligibility.
6. PAN Card of the Loan Applicant
A PAN card is among the other documents required for a Business Loan. Whether you’re an individual, firm or company, you should get a permanent account number from Indian income tax departments. It is this account number of the PAN card that you are supposed to submit when applying for a loan.
The PAN brings universal identification of your financial transactions and tracks taxpayers’ transactions to prevent tax evasion.
7. Last Two Years Audited Balance Sheet
An audited balance sheet is part of the document requirements for a new business loan eligibility calculator. Your income statement provides a report of your credit history.
On the other hand, your balance sheet gives a snapshot of your present financial situation, which is essential during a loan application. A balance sheet indicates your accounts receivable, equity sources, liabilities and current status. Every figure of those components illustrates what your business owns and what you owe.
You can get a good Business Loan deal when your current assets exceed your liabilities.
8. Business Existence Proof
Do you have a running business and are applying for a loan? You may be required to provide proof of business existence. ITR and sales tax certificates can help prove your business operations. You can also use establishment certificates and trade licenses to show your business has been running.
9. GST Certificate
You should submit a GST registration certificate if your business has an aggregate annual turnover of about Rs.20 lakhs. In addition, when your business deals with eCommerce, interstate supply, export or import, you need GST registration irrespective of your annual business turnover.
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Conclusion
NBFCs offer Business Loan eligibility criteria that are pretty simple to fulfill for any business requiring a loan. Once you provide the required documents as proof of business existence and audited financial statements, you can be sure to get funds for your business.