Small Business Loan Application Checklist

A business loan can be useful for both existing and upcoming entrepreneurs. A small business loan can help you in the following ways:

• Replenishing inventory
• Purchasing, upgrading, or replacing plant and machinery
• Covering daily expenses
• Spending on marketing activities
• Hiring and training employees
• Relocating to new premises
• Refinancing current debt
• Paying tax implications
• Responding to growth opportunities
• Funding business expansion

The utility of a small business loan is manifold but before you begin with the application process, make sure that you are fully aware of the eligibility requirements. Let’s take a look at the checklist.

1. Identity Proof: As a loan applicant, you need to ensure that you have a valid identity proof with you. You can submit your passport/ PAN card/ driving license/ Aadhaar card/ Voter’s ID card as your identity proof to the lender when you apply for a small business loan.
2. Personal background information: For evaluating your personal background, the lender will necessarily ask you to provide information like a certificate of your educational background, employment history, if any, etc.
3. Address proof: You will need to provide proof to confirm your current address. You can use your telephone bills/ electricity bills/ ration card/ trade license/ passport/ lease agreements, etc., to confirm your present address.
4. Business plan: A small business loan requires you to draft a business plan that reflects the estimated revenues, losses, and cash flows through projected financial reports and a balance sheet.
5. Proof of income: You will also need to provide your updated bank statements for the previous two years.
6. Financial reports: The lender will mandatorily ask you to submit your income tax returns , computed income statement, and balance sheet for the last two years.
7. Business credit report: If you are applying for a loan for an already established business, then make sure that you submit your business credit report to the lender.
8. Legal documents: The loan also requires you to submit legal documents like articles of incorporation, commercial leases, franchise agreements, proof of business continuation, and audited financials for the previous 3 years.

You can always apply for a business loan irrespective of whether your business is in the launching stage or is already an established entity. The application process for a small business loan can get tricky if you are not ready with the relevant paperwork. In the absence of necessary documentation, the loan request can also be rejected. Make sure to stick with the small business loan application checklist when you submit your loan request.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.