Lenders Guide on Documents Required for a Business Loan. Every lender has a prescribed set of eligibility criteria that borrowers must meet to be able to apply and get sanctioned for the loan application. Subsequently, individuals applying for a business loan in Maharashtra or any other state in India must procure documents in support of their loan application. These documents are a must for lenders to be able to process your loan application and approve it.
Here’s a checklist of general documents needed by lenders for a business loan –
Proof of identity
Any government identity proof that contains your name, date of birth, and photograph verifying your identity as an Indian resident can be submitted with the loan application form. Aadhaar card, Voters ID card, driving license, PAN card, Passport, etc. can be valid proof of identity financial institutions accept.
Proof of address
Proof of address documents verifies the permanent address of an Indian city where they can be reached at any given point of time. This is one of the most important business loan documents, failing to produce which can lead to immediate rejection of one’s loan application. Candidates can produce a Passport, electricity bill, ration card, telephone bill. Trade license, sales tax certificate, lease agreement, etc. as proof of address.
Proof of monthly income
One of the documents required for a business loan is monthly income proof. Financial institutions decide whether to approve your credits or not based on your monthly income and to verify if a candidate has provided the correct information in their loan application they ask to produce bank statements for the last 2 years.
Other financial documents
For existing business owners who have applied for a loan by showing it as their only source of income should produce Income tax return filing documents for the previous 2 years along with business balance sheet, profit and loss account, etc. It proves the viability of their business and assures lenders of their repayment capability. One can avail a business loan in Maharashtra by producing these financial documents with their credit application.
Proof of business ownership
Documents in support of one’s business ownership like sole proprietor declaration or business registration documents are needed in the application procedure of business loans. Lenders need these proofs to evaluate a loan application.
Proof of business continuation
Produce proof of business continuation for the past 2 years along with audited financial documents etc. as required by the lending institutions. Providing these business loan documents to support your loan application increases chances of approval.
Subsequently, business loans can be availed by individuals belonging to the following three categories –
- Self-employed professionals – who work as an independent freelancer for different companies and clients. For example, teachers, engineers, doctors, CA, etc.
- Self-employed non-professionals – they are usually business proprietors working with a team.
And thus, there are some additional sets of documents that lenders seek while approving their loan application. Failing to produce any such documents or providing discrepant documents can be one of the reasons why your business loan application was rejected.
Additional documents required by Self-employed professionals
- Proof of identity of the sole proprietor
- Proof of address of the sole proprietor
Additional documents required by Self-employed non-professionals
- 3 years income tax return filed documents
- 3 years sales tax returns
- Copy of creditor-statements, book-debt, and periodic stock
Check off this list and avail a business loan in Maharashtra or any other state in India for your business venture. You can use the borrowed money for the establishment or expansion of your business unit. Furthermore, these documents let lending institutions assess the risk associated with your business situation and hence chances of approving loan application is increased substantially.