Table of Contents
Whenever you are seeking a business loan, you will be required to submit a list of documents. Therefore, it is a good idea to understand what the commonly required documents are for a business loan. This will help you to be prepared and fasten the application process at your end. This article focuses on a list of required documents for a business loan.
Commonly required documents for a business loan
Here is the list of commonly required documents.
Duly filled application form
Personal identification proof
- Aadhaar card
- Voter’s ID
- PAN card
- Driving license
- Aadhaar card
- Latest utility bill
- Rental agreement
- Bank passbook
- Ration card, etc.
- A copy of CA audited balance sheet
- A copy of CA certified turnover certificate
- Bank statement for 6-12 months
- 2-3 years ITR
- Filed GSTR
Other business documents
- GST certificate
- Trade license
- Incorporation certificate
- Partnership deed
- MSME/Udyam registration certificate
Additional required documents
Documents below are not asked by all banks or NBFCs. However, it is a good practice to prepare them well in advance since it requires time to build a document such as a business plan.
- Business plan: The lending institution may ask for your business plan. It gives them further clarity on the financial health of your business, your plans, need for funds, fund allocation, growth forecast, product portfolio, etc.
- Collateral-specific documents: If you are promising collateral, you will need to produce collateral-specific documents as a security. For example, if you are promising your factory as collateral for obtaining a business loan, you will need to submit a factory purchase agreement.
- Other loan declarations: Bank or NBFC can also ask you about other ongoing loans that you may have. This helps banks to evaluate your repayment capacity.
Required documents for a business loan: Important things to remember
- Although there are some basic documents that all lending institutions ask for, the list of required documents may change as per the business loan type. Meaning a working capital loan may have a different list of required documents than a machinery loan. For example, if you are seeking a loan for buying machinery, you will need to submit relevant documents such as machinery quotation, etc.
- Now days, a general inclination towards online loan applications is observed. If you are also applying for a business loan online, you may require minimal documentation. However, you will need to submit digital copies of the required documents. Therefore, it is best to have scanned copies of your documents.
Examples of documents required by specific banks/NBFCs
Each bank and NBFC has its own set of documents required. Generally, it is believed that NBFCs ask for lesser documents compared to banks. Here are a few examples of documents required for a business loan from banks and NBFCs.
HDFC Bank: documents required for a business loan
- Identity proof – Aadhaar card/Passport/Voter’s ID card/PAN card/Driving license
- Address proof – Aadhaar Card/Passport/Voter’s ID card/Driving license
- Bank statement for the previous 6 months
- Latest ITR along with the computation of income
- CA certified balance sheet and profit & loss account for the previous 2 years
- Proof of continuation – ITR/Trade license/Establishment/Sales tax certificate
- Other documents – Sole prop. Declaration/Certified copy of partnership deed/Certified true copy of Memorandum & Articles of Association (certified by Director) & Board resolution (Original)
Bajaj Finserve: documents required for a business loan
- Application form: Fill out the loan application form with the necessary details with one passport-sized photograph
- Proof of identity: Passport/PAN card/Voter’s ID card/Driving license/MAPIN (Market Participant Identification Number) card
- Address Proof: Aadhaar Card/Voter’s ID/Ration card/telephone bill/lease agreement/electricity bill
- Proof of Age: Passport/PAN card/Voter’s ID
- Financial Documents: IT returns for the last two years, bank account statements for the last six months, and P&L and balance sheet for the last two years audited by a CA.
Note: Above list of loan documents are as per the prevailing requirements. The list is subject to change as per the lending institution’s decisions. It is best to get in touch with the concerned lending institution to know the required list of documents for a business loan.
Tips to collate documents for a business loan
- Timely submission of all required documents plays a key role in business loan approvals. Therefore, keeping your documents organised will help you to get faster loan approval and disbursal.
- You will need basic documents such as an Aadhaar card, PAN card, etc., for multiple purposes including obtaining a business loan, availing government schemes, tendering processes, etc. Hence, it is best to have digital copies ready in your system.
- The most preferred formats for digital copies are .jpg, .png, .pdf, etc. Check the accepted format of the lending institution before uploading.
- Also, it is imperative to have CA audited copies of the balance sheet, P&L sheet, etc., annually.
While approving a business loan, a lending institution is mainly concerned about the loan repayment. Your documents reflect the financial health of your company and thus, suggest your creditworthiness. Therefore, you need to build your case through the list of documents you are submitting. In addition to the list of documents, what suggests your creditworthiness is your credit score. Therefore, if you are planning a business expansion or starting a new project, etc., and you know you will need a business loan, you can start building your documents and credit score immediately.