Business loan is sanctioned to start a new business, expand an existing business purchase of asset etc. Most of the entrepreneurs don’t know on how to apply for a bank loan or what are the procedures. Here we are explaining the procedures forgetting a bank loan. If we can make it
much simpler, an entrepreneur must know what the expectation of a bank from the entrepreneur.
Before you are approaching a bank you should prepare with 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 photocopy 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 which ever mandatory needed for your business. Rent agreement , GST registration (if applicable) etc.
- Project report – You should carry a project report for getting bank loan which will clearly explain the details of your business, and why you need the fund , how you are going to repay the loan , your business location and infrastructure facilities , projected profitability, balancesheet for the next 3-5 years etc should be there. Finline can help you in creating detailed project report for getting a bank loan.
- Photograph – You should carry your photograph in order to apply the loan. If it’s a group of person, then carry all the stakeholders photograph.
- Source of capital – The bank will only issue 75% of the total project cost, the entrepreneur has to contribute 25% of the money which is commonly known as margin money. The details of the margin money need to be submitted sometimes. Eg: Fund from friends or family etc.
- Personal Credit score – This is a historical data about your previous bank loans , financial liabilities etc and how better you are repaying that. Normally it is known as CIBIL score, Experian score etc . You don’t have to bring this, bank can check this using your Aadhar details. If need to know about this you can also check the credit score for free from cibil or experion sites.
- Due diligence certificate – This is a document prepared by the bank manager by cross checking your details from other entrepreneur or from society. Your background, experience etc will be recorded in that