Want To Apply For A Business Loan Here Is A Checklist Of Documents You Will Need

A business loan comes in handy when you want to expand it or deal with the existing set of challenges. It can be used to manage cash flow, expand your workspace, hire new staff, or buy new equipment or inventory. A business loan is collateral-free, and you can get a loan based on the credit history and credit score of the directors and the business. As for any other loan, a business loan will need some important documents to apply for it. Before you apply for it, it is essential to know the checklist of documents you will need. 

Documents Required For A Business Loan  Business owners expect to have an easy application process for their loan application. They require transparency, minimum documentation hassle, and customized loan provisions. But, still a minimum number of documents is required.

The main documents required for the business loan are:  Application  Form: As a first step, you should fill out the business loan application form. There could be an online or offline mode for filling up the application form.  Whatever may be the mode, the information that the lender would require will be similar. 

Name of the business Address of the business  Nature of the business Purpose of taking the business loan  Information of founder/directors  Address of founder/directors Personal background information of the founder or directors.  Existing loans on the business or directors. Plan to pay the loan  It is important to be careful while submitting your application to the lender. Fill the form accurately and completely. 

Business loan Documents:  Borrower information form: The lender will give out a borrower information form which they will expect you to fill. The individual has to fill in all the details about himself/herself, such as name, address, phone number, email, and other personal information. You will also be asked to fill up the organization details, goals of the firm along with its vision and mission. This is basic information that may be required with any lender for processing your business loan application. 

Also Read: Business Credit Reports - Get Company Credit Score Report 

Background and financial information: You would be required to fill up the background and financial information. Anybody who is a founder, director, guarantor, or authorized person in a business will need to share this information with the lender at the time of filing the business loan application. You will have to fill up details about your credit score and the kind of assets owned by the management and the business. 

Loan History: You will be required to provide documents regarding the loan history of the business - the loans taken in the past, your repayment record,  and any request for a loan that you may have submitted in the past. 

Business registration Proof: You have to submit your business registration proof. Depending on the nature of the business, it can be a proprietorship, partnership, private limited firm, public limited company, or a limited liability company. 

Business Financials: You have to share the financials of the business with the lender. This is to explain the financial position including the revenue and profits. Lenders usually ask for the financials of the past 2 to 3 years to evaluate the current state of affairs. Documents like the balance sheet, profit and loss account,  etc. are not required. 

ITR Records: The lender will also ask for the income tax records of the business. The last 3 years of ITR records are required by the lenders. 

Partner Resumes: Each partner of the business will be asked to submit his  or her personal resume. This is different from the standard resume that is seen for job applications. This is specially tailored for the business loan application. The resume will include information like professional history, educational background, business background, achievements, goals, and vision for the company. This will be a great way to showcase your business acumen and your ability to run a successful business. 

Business Overview:   You also have to share a business overview that explains the history of the business, plans, and objectives. This is a good place to showcase how your business stands out in the market and has a better probability of being successful. 

Also Read: How Do I Qualify For A Business Loan?

Lease Agreement if Any: If your business needs a physical location to operate, you will need to submit a copy of the lease agreement. This will help the lender in evaluating how these lease agreements are structured. This may or may not apply to you depending on the nature of your business.  For example, if your business is completely online, you do not have to store or ship goods. 

Accounts Recievable and Accounts Payable Aging: The lender will want to understand how well your business performs in tough situations. Since in a B2B business model, a lot of goods and services are borrowed and lent on credit, he will want to understand whether the customers are paying you regularly and you are using your working capital properly. These can be learnt by assessing the accounts receivable and accounts payable ageing. 

Business’s Bank Statement: For availing a business loan, you should submit the bank statement of the past 1 year for both the business and management. The lender will check the financial details submitted in the previous steps through this and check the buying behavior of the borrowers. You can request for the bank statement of the past 12 months from the bank. 

KYC Documents:  Aadhar Card Driving Licence Voter ID Pan Card. Address Proof which may include Aadhar card, passport, utility bill, rent agreement or any proofs of ownership. Six-month bank account statement Conclusion Producing the correct documents is the first step towards procuring a business loan. Out of the multiple reasons why a loan is rejected, documents may be the primary reason. Documents that record the business’s health and audited financial statements can help in easing a business loan’s approval. 

FAQS Want To Apply For A Business Loan? Here Is A Checklist of Documents: 1:What are the documents required to obtain a business loan from HDFC Bank? 

The following documents are required along with your business loan application for an HDFC Bank business loan 

PAN Card - For the company/firm/individual

A copy of the following documents for identity proof:

Aadhaar Card Voter's ID Card PAN Card Passport Driving License Address proof - any one of the following documents:

Aadhaar Card  Driving License  Voter's ID Card Bank statement for the previous 6 months Passport Latest ITR along with computation of income, balance sheet, and profit and loss account for the previous 2 years, after being CA certified/audited.

Proof of continuation (ITR/Trade license/Establishment/Sales Tax certificate)

Other essential documents are sole proprietor declaration or certified copy of partnership deed, certified true copy of Memorandum & Articles of Association (certified by Director) & Board resolution (Original)]

2:How can I get a business loan without ITR?

You need to provide the following documents to get a business loan without ITR - Completely filled in application form, passport-size photographs, business plan, current account bank statement, identity proof such as voter’s ID, passport, driving license, business existence proof, address proof such as PAN card of the company, individual, or partner (s), residence proof such as driving license, voter’s ID, passport, electricity bill, bank statement, rent agreement, etc. Company’s Incorporation Certificate, Partnership Deed or MOA (Memorandum of Association), Shops and Establishment Certificates, and rent agreement.