Business Loan Applications Required Bank Statements 1

Business Loan Applications: Required Bank Statements

Business Loan Applications: Required Bank Statements

Why Banks Want to See Your Papers?

When you ask for a business loan, banks must check if you can repay it. They look at your papers, telling them about your money and business. Let’s learn about the important papers you need to get a loan.

The Big Six: Papers You Must Have

1. Your Business Plan

A business plan is like a map for your company. It shows where you want to go and how you’ll get there. Your plan should say:

  • What your business does
  • What you sell
  • Who will buy from you
  • How you’ll beat other businesses
  • How you’ll tell people about your stuff
  • How much money you think you’ll make
  • Who’s in charge of what

Banks like to see a good plan. It shows them you know what you’re doing. Make sure to say how you’ll use the loan money and how you’ll pay it back.

2. Money Papers

Banks want to see how your business handles money. They ask for two kinds of papers:

  1. Financial statements: These show if your business is making money. You need:
    • A balance sheet
    • An income statement
    • A cash flow statement
  2. Bank statements show how money moves in and out of your account. You usually need to show the last six months.

These papers help banks determine whether you’re good with money and can repay the loan.

3. Tax Returns

Your tax returns show how much money your business made and how much tax you paid. Banks usually want to see your tax returns for the last three years. This helps them see if your business grows and makes money over time.

4. Business Registration Papers

These papers prove your business is real and follows the rules. You might need:

  • A paper that says your business exists
  • A paper that says what your business does
  • A paper that shows you can collect taxes
  • A paper that says you can run your business in your town
  • A paper that shows you’re a small business

5. Stuff You Own

Sometimes, banks want you to promise something valuable if you can’t repay the loan. This could be:

  • A building
  • Machines
  • Things you sell
  • Money people owe you

If you have something like this, you need papers to prove you own it. This makes banks feel safer about giving you money.

6. Who Are You?

Banks need to know who you are. They ask for papers that prove your identity. You might need to show:

  • Your ID card
  • Your tax card
  • Your voter card
  • Your passport
  • Your driver’s license

Usually, you only need to show two of these. But check with the bank to be sure.

Getting Ready to Ask for a Loan

Here are some tips to help you get ready:

  1. Make a list of all the papers you need.
  2. Check off each paper as you get it ready.
  3. Make sure your money papers are up to date.
  4. Ask someone smart about business to look at your plan.
  5. Make sure your ownership papers are correct.
  6. Keep copies of everything for yourself.

Why These Papers Matter?

Having all these papers ready shows banks you’re serious. It helps them decide faster if they can give you a loan. Without these papers, banks might say no to your loan.

What Else Helps You Get a Loan?

Besides having the proper papers, here are some things that make banks more likely to say yes:

  1. A good credit score shows you’ve been good at paying back money.
  2. Owning valuable things: This makes banks feel safer about lending to you.
  3. Steady income: This shows you can probably pay back the loan.

Looking at Your Bank Papers

Banks look closely at your bank statements. Here’s what they check:

How Much Money You Have

They want to see if you have enough money to make loan payments. They also look at how much you save each month, which helps them determine whether you’re good with money.

If You Ever Run Out of Money

Sometimes, people take out more money than they have. This isn’t good. It makes banks worry you might be unable to repay a loan.

Where Your Money Comes From

Banks want to know your money comes from good places. They check to make sure it’s not from anything illegal.

What You Spend Money On?

They look at what you buy and pay for. This helps them see if you have other loans or credit card bills you haven’t told them about.

Why do Bank Statements Matter So Much?

Your bank statements tell a story about how you handle money. They show:

  1. If you make enough money to pay back a loan
  2. If you’re good at saving money
  3. If you pay your bills on time
  4. If you have other loans you’re paying off

Banks use this info to decide if they can trust you with their money.

What Happens If Your Papers Look Bad?

If your bank statements show problems, banks might not want to give you a loan. They might think you’re not good with money. This could mean:

  1. You don’t have enough money saved
  2. You often run out of money in your account
  3. You have big bills you’re struggling to pay
  4. Your income isn’t steady

If banks see these things, they might say no to your loan.

Getting Your Loan Faster:

To make getting a loan easier:

  1. Know what papers the bank needs before you ask for a loan
  2. Have all your papers ready when you apply
  3. Make sure your papers are correct and up to date
  4. Choose a good bank or money company to ask for a loan

Some companies, like IIFL Finance and Shriram Finance, try to make getting a loan easier. They don’t ask for too many papers, and you can even apply for a loan online with them.

Wrapping Up:

Getting a business loan can help your company grow, but you must be ready. Having the proper papers is super important. It shows banks that you’re serious and trustworthy.

Remember, banks look closely at your money habits to ensure you can repay the loan. If you’re good with money and have your papers ready, you’re more likely to get the loan you need.

So, get your papers in order, show that you’re good with money, and pick an excellent company to ask for a loan. This will give you the best chance of getting the money your business needs to grow and succeed.