Though digital advancements have made loan applications much more manageable, the technical aspect of it still can be challenging for many. However, following a step-by-step approach makes you less likely to face challenges. The most important aspect of applying for a loan is arranging the business loan documents. Before contacting the lender, ensure you have these documents ready.
Explore the loan approval checklist to help you apply for a loan. There are several things that you must take care of before you apply for a business loan. Given below is a comprehensive checklist of the same.
Business Loan Application Form
Every lending institution asks for a duly filled business loan application form. You can find it on the website of the lender. Provide your basic details like name, address, work details, and age.
Borrower Information Form
Business loan lenders also need the personal information of the borrowers. Here, you need to fill in your details. Along with the form, you also need to submit identity proofs such as Aadhar cards, passports, and driving license. To validate your residence, you need to submit an address proof along with business documents.
Business loans do not have collateral. Hence, lenders are extra cautious while releasing the amount. They might ask you to list all your assets and liabilities to assess your credibility. Make sure you use a business loan calculator in India to check your eligibility before you disclose your financial position.
Business Financial Statements
Before moving further, furnish the company’s financial statements. These include balance sheets, profit and loss statements and cash flow statements. Lenders use these statements to check the repayment capabilities of the business.
Business Continuity Proof
Before applying for a business loan, you must arrange proof to show that the business is here to continue its operations. You can provide documents like trade licenses, Establishment Certificates, etc., as valid proof of business continuity.
Income Tax Returns
It is essential to provide personal and corporate income tax return records for at least three years to apply for a business loan. Ensure the statements are authentic and are in lin with your financial information.
Loan Application History
Banks and other lenders ask for documents related to any previous loans that you might have. They do so to assess the repayment capability correctly. If loan applications were rejected earlier, the bank might ask for extra documents to evaluate your creditworthiness.
The bank statement is perhaps one of the most important documents for a business loan. It gives the lender an overview of the transactions within your firm. It also helps in gauzing your financial position better.
Businesses have different partners and owners. To check the credibility of these owners, lenders may ask you to submit their resumes. These resumes will help them in verifying their backgrounds before approving the loans.
A lease certificate is another important business loan documents. It provides substantiation to the lender that your business exists. If you are still looking to lease an office space, give it as soon as you get a place. However, it is not a mandatory requirement for digital businesses.
Make sure you submit a document with a business overview to the lender. The paper must briefly explain the company’s history, vision and mission. It should also highlight the activities of the business. You must also attach the memorandum and the articles of association with the overview document.
Once you check your business loan eligibility using the business loan calculator, make sure you start arranging all the business loan documents. You must also contact the lender and try to understand their requirement. The selection of the papers will depend on these requirements. Also, you must avoid submitting any counterfeit documents as they can not only lead to the rejection of your application but also cause legal issues.