Business Loan: Key documents needed to secure financing, check full list

Large brands and companies can easily secure business loans to cover their expenses and expand their operations. However, for small entrepreneurs, securing credit to finance their business can become a challenge. Getting a business loan is an important step to finance your initiative during its initial phases or for crucial expansion at the right time. You may also need funds for any emergencies related to your business.

The banks and other financial service providers require several documents while providing a business loan. These documents must be submitted to lenders by the business owners. Banks and other lenders assess these business loan documents to disburse funds to the company.

Here is everything you need to know about business loans and the documents required to apply for them.

What is a business loan?

A business loan is a financial product that is designed to offer financing to your company for various purposes. This can include working capital, business expansion, purchase of equipment, inventory management and so on. A business loan typically involves borrowing a specific amount of money from a bank or a non-banking finance company (NBFC), whereby the lender and the borrower agree to certain terms and conditions for repayment, including interest rates and repayment tenures.

Business loans play an important role in helping businesses grow. You can apply for loans up to Rs 15 lakhs on the Moneycontrol app and website in a 100% paperless process. The interest rates for loans start as low as 12% per annum.

Before applying for a business loan, it is important to prepare yourself and your business in order to maximise your chances of approval. Evaluate the financial health of your business and ensure you know how you will use the loan amount for your business. You further need to assess your own credit health as well, as your creditworthiness will also determine the loan amount. You also need to gather your business loan documents before availing it.

ALSO READ: Business Loan Eligibility: All you need to know about business loan approval

Business loan documents: What all do you need?

While getting yourself ready to apply for them, it is important to gather the documents required for business loans. Keeping these business loan documents ready will be effective in order to get your loan approval process started quickly.

Business loan documents requirements can vary from lender to lender, but most of them require the basic ones. Here are the usual documents required for business loans.

• Proof of company identity: You will have to give proof of the company’s identity and prove it exists before applying for a business loan for that institution. This can be the PAN card of your business, water or electricity bills and business registration documents, among others.


• Proof of individual identity: You will also be required to provide the details of your individual identity. You can use your Voter ID card, Aadhaar card, PAN card, passport or driving licence to prove your identity to the borrower in order to secure a loan for your business.


• Address proof: Providing an address proof as a document is another important step to secure a business loan. You have to present your Aadhaar Card, Passport, Voter's ID Card or your Driving Licence as your address proof.


• Financial documents: Finance related documents of the business such as its profit and loss accounts, balance sheets, passbooks, account statements are also required for securing a business loan.


• Bank statements: Checking the bank statement and credit history of the individual and the business is extremely important for providing a business loan. Lenders typically want 3-6 months of bank statements, but it varies from company to company. Some can even ask for statements for the whole year.


• Business registration documents: Certificate of Incorporation, Memorandum of Association, Articles of Association, GST registration certificate, Trade licence, and MSME/Udyog Aadhar registration are essential documents to apply for a business loan.


• Tax returns: The lender may ask for the tax returns of your business for the previous few months to assess its compliance.


• KYC documents: KYC documents like incorporation certificate, partnership deed, identity/address proof, PAN cards and more are also essential.

Get Instant Loan Up To Rs.15L

How to get a loan on business loan apps?

Many banks and NBFCs allow you to apply for business loans online. This can be availed by using their business loan apps. You can get these instant loans by giving your name, address, the industry of your business, its financial statements and so on. If you have an existing relationship with the bank, the loan disbursement chances are higher. They may also require a lot less time since everything is done online with minimal human intervention.

ALSO READ: How to Secure the Best Business Loan Interest Rate

The Bottomline

Business loans are important in order to take your company to the next phase. They help your company grow and expand its business, while also providing you with a safety net. Business loan documents are an important part of the process to secure business loans. Make sure you keep them handy before applying for a business loan. You also need to keep in mind the repayment tenure and comply with the agreed-upon deal to repay your loan with interests.