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What documents are required when applying for a Business Loan?

When applying for a business loan, there are certain documents that you need to provide depending on the type of business structure you have.

For a proprietorship business, you will need to provide:

  • Passport-sized photo of yourself: This is a standard photo that is used for identification purposes. You’ll need to provide a recent, passport-sized photo of yourself to be used for verification and documentation purposes.
  • PAN (Permanent Account Number) and Aadhaar card for both the applicant and co-applicant: PAN is a unique 10-digit identifier issued by the Income Tax Department of India to all tax-paying entities. The Aadhaar card is a government-issued identification card that serves as proof of identity and residency in India. You’ll need to provide both the PAN and Aadhaar card for both the applicant and co-applicant to prove your identity.
  • Business registration documents, including GSTIN and UDYAM: GSTIN (Goods and Services Tax Identification Number) is a unique identifier issued by the Indian government to businesses for the purpose of registering, collecting, and paying goods and services tax. UDYAM is a new registration process launched by the Ministry of Micro, Small and Medium Enterprises (MSME) to ease the process of obtaining MSME registration. You’ll need to provide these registration documents to prove that your business is legitimate and registered with the government.
  • Proof of ownership of your business, such as a recent utility bill that serves as an address proof: You’ll need to provide proof of ownership of your business to show that you have control over the business and are legally allowed to apply for a loan. A recent utility bill that serves as an address proof is one common example of proof of ownership.
  • Your ITR (Income Tax Return) computation, balance sheet, profit and loss statement, and audit report from the last two years: An ITR is a document that you file with the Income Tax Department of India that provides information about your income and taxes. The balance sheet, profit and loss statement, and audit report are all financial statements that provide information about the financial health and performance of your business. By providing these documents, you can demonstrate the financial stability and profitability of your business.
  • GSTR3B returns from the last 12 months: GSTR3B is a monthly return that businesses in India are required to file with the government that provides information about their taxable sales, purchases, and taxes paid. By providing the last 12 months of GSTR3B returns, you can demonstrate that you are up-to-date on your taxes and are in good standing with the government.
  • Details of any running loans and the sanction letters for these loans: If you have any existing loans, you’ll need to provide details about these loans, including the amount, interest rate, and the sanction letters for these loans. This information helps the lender assess your creditworthiness and determine whether you are capable of taking on additional debt.
  • Records of your current and limit accounts for the last 12 months: Finally, you’ll need to provide records of your current and limit accounts for the last 12 months. This information provides a picture of your financial stability and helps the lender determine whether you are a good candidate for a loan.

For a partnership business, the required documents are similar to those for a proprietorship, but with a few extra requirements:

  • Passport-sized photos of both partners
  • PAN and Aadhaar card for all partners
  • Business registration documents, including GSTIN, UDYAM, PAN, and a partnership deed
  • Proof of ownership of your business, such as a recent utility bill that serves as an address proof
  • Your ITR computation, balance sheet, profit and loss statement, and audit report from the last two years
  • GSTR3B returns from the last 12 months
  • Details of any running loans and the sanction letters for these loans
  • Records of your current and limit accounts for the last 12 months: Records of your current and limit accounts for the last 12 months refers to the documentation of your bank account transactions for the last 12 months. This can include bank statements, passbook entries, or any other records that show the activity in your current or limit accounts.

For a PVT LTD business, the required documents are similar to those for a proprietorship and partnership, but with a few extra requirements:

  • Passport-sized photos of all directors
  • PAN and Aadhaar card for all directors
  • Business registration documents, including GSTIN, UDYAM, PAN, COI, MOA + AOA, LOD, and LOS
  • Proof of ownership of your business, such as a recent utility bill that serves as an address proof
  • Your ITR computation, balance sheet, profit and loss statement, and audit report from the last two years
  • GSTR3B returns from the last 12 months
  • Details of any running loans and the sanction letters for these loans.
  • Records of your current and limit accounts for the last 12 months.

In simple terms, when you apply for a business loan, you’ll need to provide some personal and business information to prove that you are capable of paying back the loan. This information can include your passport photo, proof of identity, and business registration documents, as well as financial information about your business such as tax returns, balance sheets, and records of any running loans. The specific requirements may vary depending on the type of business structure you have.

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