A business loan is sanctioned to start a new business, expand an existing business purchase assets etc. Most entrepreneurs don’t know how to apply for a bank loan or what are the procedures. Here we are explaining the procedures for getting a bank loan. If we can make it
much simpler, an entrepreneur must know what the expectation of a bank is from the entrepreneur.
Before you approach a bank you should prepare the following documents:
- KYC documents – Your identity details – Always take identity cards such as PAN, AADHAR, Election ID card, Ration card, Driving license, Passport etc. Please take at least 3 photocopies of any of the same ( preferably Aadhar and PAN) also you should carry the original too
- Company registration details – Your identity details of the business like registration details whether it is currently operating or going to start a new one, you should complete the registration procedure to get a loan– MOA/AOA, Partnership deed, Panchayath/Municipality/Corporation registration details, Licenses issued for your business like FSSAI, pollution, boiler license etc whichever mandatory needed for your business. Rent agreement, GST registration (if applicable) etc.
- Project report – You should carry a project report for getting a bank loan which will clearly explain the details of your business, why you need the funds, how you are going to repay the loan, your business location and infrastructure facilities, projected profitability, balance sheet for the next 3-5 years etc should be there.
- Photograph – You should carry your photograph in order to apply for the loan. If it’s a group of people, then carry all the stakeholder’s photographs.
- Source of capital – The bank will issue only 75% of the total project cost, and the entrepreneur must contribute 25% of the money, commonly known as margin money. Sometimes, you need to submit the details of the margin money. Eg: Funds from friends or family etc.
- Personal Credit score – This is historical data about your previous bank loans, financial liabilities etc and how better you are repaying that. People typically refer to it as a CIBIL score, Experian score, etc. You don’t have to bring this, the bank can check this using your Aadhar details. If you need to know about this you can also check the credit score for free from Cibil or experion sites.
- Due diligence certificate – The bank manager prepares this document by cross-checking your details from other entrepreneurs or from society. Your background, experience etc will be recorded in that.
About Finline!
Finline is an online platform for creating financial reports for getting bank loans and investments. It’s like ‘Canva’ but for financials. If you are an entrepreneur looking for a bank loan, you need to have a well-crafted project report. We, at Finline will help you with that. Our team will help you create a powerful business plan in ten minutes. That too in your language. All public and private sector banks working in India accept our project report. Click to create your report.