Small Business Loan Application Checklist
Business Loan Application Checklist
With easy accessibility of loans and various lending options, business owners are in a much better position today. But before you decide to take your business to the next level, make sure it is moving in the right direction and is set to achieve the intended targets. Earlier getting a loan sanctioned from bank would mean running from pillar to post for compiling documents, but today online loan for small business require minimum documentation. Even though loans are approved within 59 hours, you have to organize the documents before you apply for a SME business loan online.
An SME business loan is typically taken to fund expansion of business, purchase inventory, buy machinery and equipment, or funding working capital, etc. Finding the right SME business loan at a reasonable rate of interest may require a lot of research. Always consider your financial capacity before quoting a business loan amount because if that is proved, you will stand a better edge and even avail a small business loan at competitive rates. Small business loans can be applied online on platforms such as Lendingkart at a reasonable rate of interest. There are a host of documents which will still be required if you apply for a loan online or offline. Firstly, you will have to complete the loan application form with correct information. You will also need to provide passport size photographs. Documents can vary from one lender to another depending on the type of loan.
To avail a small business loan, you will have to submit documents depending on whether your loan is secured and unsecured. For instance, a secured loan will require collateral which means you have to provide essential documents related to your asset which could be a property (residential or commercial), gold or shares. However, unsecured business loans will require some of the following documents stated below. A secured loan will also require the same documents along with the proof of assets.
Here we take you through the list of documents to be submitted along with the application form.
- Identity proof: You will have to provide identity proofs which can be in the form of a passport, photo pan card, voter’s identity card, driving license, etc.
- Residential proof: This is another critical requirement of a loan. You should be able to provide a proof of residence in the form of a ration card/telephone bill/ lease agreement/ electricity bill/ passport/trade license /sales tax certificate.
- Proof of age: You need to have an age proof and this can be supported by passport, photo pan card or voter’s identity card.
- Financial documents: You have to get copies of IT returns for the last two years along with the latest bank statements for six months and profit and loss and balance sheet for the last two years. The P&L also needs to be audited by a chartered accountant.
- Track your credit score: Being aware of your credit score before applying for a loan is important. Lenders take note of your credit scores to check your capability of paying off the loan amount. A good score increases the chances of your loan approval.
- Get your documents in order: It is always advised to organize all the documents when you apply for the loan. Some of the above documents such as ID proofs, balance sheets, address proofs, cash flow statements, business documents and permits, and income statements are mandatory for a business loan. These documents give credibility to the lender about the borrower’s ability to service the loan on time.
Though banks require a host of documents to be submitted with a business loan application, the entire loan approval process has been made easier through online processing. You can further ensure that loan processing remains smooth by compiling documents in advance. This allows the lenders to verify and process your loan at the earliest.
If you have been considering an easy business loan, then make sure you meet all the requirements including documentation. It is always good to maintain recent copies of KYC, ITRs, bank statements and other documents required for SME business loans.
There are times when you start fretting over documents and qualifications for a loan at the last minute to raise money. If you have organized documents in advance, then that can help you save precious time and opportunities arising out of your business. Hence, keep a note of the most commonly required documentation for loans mentioned above and read your offer documents carefully before you sign off.