Checklist of Different Documents Required for Business Loans

Have you ever applied for an MSME loan? If not, then this blog is meant for you! Please note that taking a loan requires more work for a business proprietor. An unsecured business loan can manage cash reserves while expanding the company’s scope, hiring new staff, or buying production equipment. 

More often than not, a business loan applied can be free of collaterals, and this can be obtained based on past credit history. However, it is important to note that the business entrepreneur can apply for a significant loan if he consistently has a good credit score. 

Nevertheless, it is important to acknowledge that careful documentation is required when applying for a business loan. This blog includes the documents required to complete a valid business loan application process. 

Checklist of Documents Required For a Business Loan 

To facilitate the process of an unsecured business loan application, business owners require the following:

  • Transparency of data related to the financial performance of business
  • minimum documentation of the necessary information and customised provisions for applying for a loan 

Given the above, please note that certain major documents are required to process a business loan.

  • Application Form

The first and foremost step in getting a business loan is completing the application form. Experts state that the form could be completed online or offline. Nevertheless, it is important to note that valid information needs to be filled in so that lenders are satisfied with the authenticity of the information shared.

Information related to the same can be given as follows:

  • Nomenclature of the business concerned
  • Address of the business premises and the nature of the business concerned
  • Purpose of applying for the business loan 
  • Detailed information of the Founder members of the Directors

At the same time, the following information needs to be furnished:

  • Personal details of the founder members,s including age and qualification
  • Existing loans against the founder members concerning some other business, if any

Financial consultants agree that it is important for the business owner to declare the existing loan amounts and the total tenure for making the repayment.

  • Business loan Documents to be filled: 

Borrower information form:

The financial institution will give out a borrower information form. The form might ask for some detailed information such as:

  • Name of the business,
  • Address of the founder members / registered address of the business
  • Phone numbers of the founders and the office premises
  • Email, identities and other such personal information. 
  • Details of the organisation concerned
  • Markets of operation
  • Vision and Mission of the business concerned
  • Certain additional information might be required, such as 
  • Background of the business in the current context
  • Financial details about the current financial year, along with 3-year data
  • Proof of credit score in the recent past
  • Kind of assets owned in the business.
  • Loan History:

To apply for an MSME loan, a loan history could be requested, including loan amounts sanctioned against the concerned business in the past, rejected loans, if any, repayment period, etc.

  • Business registration Proof:

Business Registration Proofs needed to be submitted. This indicates the nature of the business, along with the liability management records.

  • Business Financials:

Financial records might be asked to disclose the revenue-generating factors, cash flow statements, etc.

  • ITR Records:

The lender can ask for the business’s income tax records. Lenders might also ask for ITR records for the past three years.

  • Partner Resumes:

Each partner of the business holding might require the submission of a detailed resume. The borrower must submit a tailor-made application suited to the business objectives. Business partners’ resumes sometimes include the person’s history, personal and professional qualifications, past achievements, etc. Such documents can prove the ability of the founder members to run the business.

Conclusion

Making an official loan application in your business has its’ own challenges. Financial institutions have standardised The entire process in India to mitigate risks for loan disbursement. In the blog above, we have already mentioned that contemporary entrepreneurs should follow a detailed checklist before making a first-time business loan application. At the same time, various business owners might be required to furnish additional information as desired by the financial authorities of our country. Nevertheless, people must estimate the necessary documents while coordinating with the nodal authorities.

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