Documentation for a Business Loan

Filling up the business loan application form is the first step towards getting a loan. Irrespective of the lender, it is an important and mandatory step for all applicants. From the lender’s perspective, thoroughness in document verification and assessment of risk are two highly important tasks. Hence, it is important for SMEs to understand the business loan documents they need to submit just as much as their business loan requirements.

A loan application will almost always need to be submitted along with the necessary business loan documents—the paperwork necessary to demonstrate your creditworthiness and ability to repay. A loan application will get processed faster if the supporting business loan documents are transparent and inspire trust and confidence in the lender.

Common Business Loan Documents

Some of the business loan details commonly asked for are mentioned below:

  • Know Your Customer (KYC) Documents: Business Entity Proof: Incorporation Certificate, Articles of Association (AOA), Partnership Deed, Shops and Establishment Certificate
  • PAN Cards: That of business entity and of the proprietors/partners/directors/promoters
  • Address Proof: That of business entity and of the proprietors/partners/directors/promoters

These documents need to be self-attested. Self-attestation means signing on the copy of the document.

Financials of the company:

  • Audited/provisional financials (including balance sheet, profit and loss, tax audit reports, VAT returns, etc.) for the last 3 years
  • Current year performance and projected turnover (printed on the company letterhead)

Bank statements:

  • Latest bank statements for the last 6 months (in case of first-time borrower); and 12 months (for others). If the SME has more than one bank account, then the statements must show 75% of the banking turnover.

 

  Products from Capital Float
Business Loan Documents Term Loan Online Seller Finance Pay Later Merchant Cash Advance Supply Chain Finance
KYC documents (SME & Applicant) Yes Yes Yes Yes Yes
ITR – audited financial documents (2 years)- Except Term Loan, only for loans>15 lacs Yes NA Yes NA Yes
VAT returns (last 3 months – 1 year) Yes NA Yes Yes Yes
Bank statements (last 6 months) Yes Yes Yes Yes Yes
Loans or OD sanctions (if any) Yes NA NA NA NA
Card settlements (3 months’ history) NA NA NA Yes NA
Invoices (3 months) and sales ledger (6 months) NA NA NA NA Yes

Requirements for business loan also depend on the nature of applicant—individual or business.

Documents for SMEs (Pvt Ltd and Partnership Firms)

  • Proof of identity of private limited company: Sales tax / VAT /service tax/excise registration; IT return of the concern;water/electricity bills; registration under Shops and Establishment Act; PANID/municipal taxes bill in the name of the concern; Memorandum and Articles of Association
  • Proof of individual identity: Any one of the following proofs to be submitted for the authorised signatories and two directors (which includes the managing director): PAN card/voter’s identity card/driving license/passport

Documents for Self-employed–Individuals and Proprietors

  • Proof of identity of sole proprietorship, for sole proprietors
  • PAN card/IT returns or municipal tax, water/electricity bill in the name of the company
  • Identity proof of the applicant/proprietor: At least, one of these - Passport/driving license/voter’s identity card/PAN card
  • Address proof of the applicant/proprietor: At least, one of these - Driving license, passport, voter’s identity card

Bonus Tip:

Most SMEs begin to learn about business loan requirements, documents and qualification only when they are in dire need of a loan. By the time they understand all the details and compile the necessary business loan documents, precious time and opportunities are lost.

We recommend that SMEs make a note of the most commonly required documentation for loans and keep it ready at all times. It is a good practice to maintain up-to-date copies of KYC, ITRs, bank statements and other documents required for business loan.


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