Do you know that one of the most common reasons for business loan rejection is incomplete or incorrect document submission? Despite banks and non-banking financial companies (NBFCs) listing the required business loan documents on their website, many applicants skip the essential details and rush through the process. It ultimately results in approval delays or, worse, outright rejections.
What documents are required for a business loan? Keep reading for in-depth insights on the subject before you hit the ‘Apply Now’ button!
Why documentation matters in business loan applications
For banks and NBFCs, it is standard protocol to assess each loan application carefully before approving it and disbursing the loan amount to the applicant’s account. They primarily evaluate the following key parameters:
- Is the company authentic and credible?
- How long has the company been in operation?
- Has the business been generating steady profits?
- Is the business owner genuine? What is their background?
- Does the business owner have a clean credit history?
- What is the credit score of the business owner? Are they capable of repaying the loan?
To verify these details, lenders heavily rely on business loan documents that serve as the primary source of information for the business owner and their company.
What are the documents required for a business loan?
When applying for a business loan with Manba Finance, you need only five essential documents. Getting this step right can significantly improve your chances of loan approval.
For each document category below, any one of the listed documents will be required:
| Sr.no | Document Category | Documents |
| 1 | Proof of identity | Pan Card Aadhar Card Passport Voter ID |
| 2 | Proof of address | Electricity Bill (Self/Parental) Purchase Agreement Property Tax Utility Bills Rent Agreement Allotment Letter |
| 3 | Business financial and bank statements | Last 6 Months Bank Statement Profit and Loss Statement |
| 4 | Business existence proof | MSME/Udyog Aadhar Registration Certificate Certificate of Incorporation Trade Licence Memorandum of Association (MoA) Articles of Association (AoA) |
| 5 | Property ownership proof | Sale Deed Title Deed Encumbrance Certificate Building Plan Approval Mutation Certificate Property Tax Receipts Possession Letter |
How do these business loan documents help in loan approval?
Let’s understand the importance of each document type required during a business loan application.
Why proof of identity is important: These are essential KYC (Know Your Customer) documents that typically include government-issued identification. Lenders review key details about the applicant’s identity, such as their photograph, full name, date of birth, address, and contact information. Lenders typically require at least one valid form of identification to verify the borrower’s authenticity and prevent potential fraud.
Why proof of address: It is another crucial KYC document required for a business loan that verifies the borrower’s residence, strengthening their loan application.
Why business financial and bank statements: Lenders need to ensure the applicant’s business is in good shape financially, a crucial indicator of their repayment capacity. For that purpose, they review various financial and bank statements and assess business continuity, income stability, cash inflow and outflow, profitability, liquidity, cash reserves, and creditworthiness.
Why business existence proof: Financial institutions trust business owners with a registered company, as it proves they carry out their operations legally and follow all rules and regulations.
Why property ownership proof: Although various NBFCs like Manba Finance offer collateral-free business loans, owning a property demonstrates financial stability and credibility, further strengthening the applicant’s profile. As a result, lenders see them as low-risk borrowers and trust that they are less likely to default.
Tips to organise your documents efficiently
Now that you know the ‘why’ of each document, let’s see how you can prepare everything before applying for a business loan. Here are three tips you can follow for a hassle-free application process:
- Gather the required documents: Go through the business loan documents list and collect them in a folder.
- Review everything: Check if the documents are up to date and accurate—don’t hesitate to seek professional help here.
- Create physical and digital copies: Make photocopies of your original documents as backups and digitize them, since most financial institutions have shifted to an online loan application process. If you are using your mobile to scan documents, ensure images are well-lit and high-resolution.
Common mistakes to avoid while submitting documents
Even one small error during the document submission process can result in loan rejection. To avoid this, watch out for these three common mistakes:
- Ensure none of the required paperwork from the business loan documents list is missing.
- Do not submit documents with outdated information, incorrect details, missing signatures, or other errors.
- Avoid uploading blurry or underexposed photos of your documents.
Ready to apply? Check your business loan eligibility with Manba Finance today!
In conclusion, having all the documents required for a business loan guarantees faster approvals. If you want to grow your small business and take it to greater heights, our Manba Vyapar Loan could be the perfect solution! We offer collateral-free loans ranging from ₹75,000 to ₹10 lakhs. What’s more, if you tick all the right boxes, from meeting the eligibility criteria to submitting the proper business loan documents, you can quickly receive the funds in your account within 4 days.
Take the first step in your business loan journey today:
