Required Documentation for Business Loan Applications: A Checklist

Applying for a business loan requires careful consideration along with the right documentation. Whether you’re looking for funds to expand your business, or debt consolidation, or hire staff, buy office space, pay salary or rent, manage inventory, buy raw materials, or launch a startup, a strong application is essential. 

For those considering a business term loan, you may need to submit additional documentation. However, bear in mind that this loan is granted after considering several factors such as credit score, payback capacity, and financial history. That said, let’s take a look at the basic checklist required for a business loan or an instant business loan. 

What Financial Statements Are Required While Applying for New Business Loans?

You need to take great care when preparing your financial statements. It must include your income statements, balance sheets, cash flow statements, and last two years’ tax filings. These documents are highly important and required because they offer a clear picture of the financial health of your company. It highlights your income sources, spending patterns, overall financial management, etc. Seeing this, your loan provider can decide whether or not to approve your application. 

Necessary Documents for a Business Loan Application 

Listed below is a list of the standard documentation that every business loan, let alone new business loans require.

• Application form with all the necessary information
• Passport-sized photo, attached to the form
• Valid proof of identity such as a driver’s license, passport, voter ID card, or PAN card
• Residential proof like electricity or phone bill, copy of your passport, Aadhar card, trade license, sales tax certificate, or a leasing agreement
• Proof of age via PAN card or passport
• Financial documents including the last two years’ income tax returns, most recent six months’ bank statements, your preceding two years’ audited balance sheet, and your profit and loss account statements that have been checked and verified by a CA (chartered accountant).

Additional Documents for a Business Loan Application

A business loan application may require different documents depending on the type of business. Listed below is a comprehensive list of the required documents:

1. Self-Employed (Partnership Firms/Pvt.Ltd)

This includes private limited co and partnership firms. Such firms need to present: 

• Copy of the firm’s income tax return, sales tax, service tax, VAT filing, and, if relevant, excise registration as proof of identity for a private limited company
• Pan ID
• Utility bills (phone, electricity, or water)
• Municipal tax bill (in the name of the business)
• Shops and Establishment Act registration certificate
• Articles of Association (AOA)
• Memorandum of Association (MOA)
• List of directors or partners involved in the business 
• Certified copy of the Partnership Deed as proof of address

2. Self-Employed (Sole Proprietorship)

This includes self-employed professionals having sole proprietorship firms. Such firms need to present: 

• Identification for the sole proprietorship business. This involves PAN card, utility bill, income tax return, or bank statement
• Copy of your passport, voter ID card, driver’s license, or PAN card as proof of your identity
• Utility bill, voter ID, passport copy, or driver’s license as proof of address

Additional Legal Documents for a Business Loan Application 

Further paperwork, like commercial leases, insurance policies, and franchise agreements can be required. This depends on the type of your business and the loan you’re looking for. If you are looking for an instant business loan, a business term loan, you may need additional documents as requested by the loan provider. These documents are asked to determine how your company complies with legal requirements and risk management guidelines.

Wrap Up

Today, applying for a business loan is no longer a complicated process. By preparing the required documentation in advance, you can ease up the approval process. For a more convenient approach, you may want to consider using an instant loan app. Lendingkart offers a seamless application process for online business loans, allowing you to access the funds you need quickly and efficiently.