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Documents Required for Business Loan

Documents Required for Business Loan

An entity may construct or expand a business unit using a loan. You can use the obtained cash for general company expenses such as purchasing machinery for plants, hiring personnel, renting office space, paying off the mortgage, and more. Thankfully, obtaining a business loan is simple. You can get the money in a few days if you match the eligibility requirements and have the necessary business loan paperwork. You must provide a certain set of supporting papers when requesting for a business loan. Important documents required for business loan: 

  • Application form.
  • Passport size photograph
  • Identity documentation of the applicant
  • Proof of Address for verification
  • Verification of age
  • Financial Records
Document list that can be used for identity verification
  • Passport
  • MPIN (Market Participant Identification Number) card
  • Voter’s ID card
  • Driver’s license
  • PAN card
Document list that can be used for address verification
  • Voter ID
  • Ration card
  • Telephone bill
  • Lease agreement 
  • Power bill
Document list that can be used for age verification
  • PAN card
  • Voter’s ID
  • Passport
Financial records needed for obtaining business loans
  • Bank account statements from the previous six months
  • Income tax returns from the previous two years
  • A chartered accountant’s audited P&L
  • balance sheet from the previous two years

The self-employed sector requires different papers for the professional and non-professional categories.

Documents needed for self employed professionals
  • Identity proof of the applicant (any documents mentioned above can be used)
  • returns of income taxes for at least three years
  • A driver’s license, ration card, passport, or voter ID that serves as proof of residency for the single proprietor
Documents needed for self employed non-professionals
  • Identification documentation for the proprietorship
  • Documents for the last three years’ tax returns, including sales tax.
  • A copy of the most recent three months’ worth of monthly stock and creditors statements
  • Last six months’ value of the primary banker’s bank statements
Recommended Articles

You might also like to read the article on the documents required for obtaining a MUDRA Loan.

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 help you with that. Our team will help you create a powerful business plan in ten minutes. That too in your language. Our reports are accepted by all public and private sector banks working in India. Click to create your report.

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Mudra Loan Interest Rate

The Government of India has introduced the Mudra loan intending to promote affordable business and entrepreneurship loans. The full form of Mudra is Micro Units Development and Refinance Agency Loans which are provided to small enterprises and non-farm agencies, trading, and manufacturing. 

The interest rates of MUDRA loans may vary from bank to bank. Subject to requirements MUDRA categorizes these loans into three segments, Shishu, Kishor, and Tarun. Therefore the interest rates also change depending on each segment, based on their needs and prescribed guidelines.

What are the Interest rates under MUDRA?

The MUDRA loan interest rate for these categories varies depending on the amount borrowed and how it will be used. Below in detail shows the interest:

Shishu Loan:

Under Mudra, Shishu loan provides small entrepreneurs up to Rs. 50,000 for a repayment period of five years, to establish their business. The interest rate for this loan will be from 1 per cent per annum to 12 per cent per annum.

Kishor Loans:

This loan will be useful for one who already kicks start their business but needs capital for running the business’s day-to-day activities. Also for new ventures where the Shishu loans are not sufficient, they can opt for Kishor loans. Kishor loans will allow the applicant to borrow between Rs. 50,000 and 5 Lakhs. The interest rate for Kishor loans ranges between 8.05 per cent to 11.05 per cent. Sometimes the interest rate will go higher based on the existing guidelines or credit rating of the borrower.

Tarun Loan:

Growth to the next phase of an existing business requires funding at the correct time, entrepreneurs can apply for a Tarun loan for the expansion. Applicants can get a loan amount between Rs. 5 Lakh to Rs. 10 Lakh. The loan tenor will be decided by the bank as per their policies. The interest rate for the Tarun loan ranges between 11.5 per cent to 20 per cent. 

How to get a Mudra Loan at a low-interest rate?

Follow the below-mentioned suggestions to get a Mudra loan with low interest rates:

  • Research about banks offering Mudra loans.
  • Compare banks offering Mudra loans and their interest rates.
  • Applicant’s banking history and repayment capability play a factor in reducing the interest rates
  • The higher the annual turnover, the lower the interest rate
  • Applicants with no previous loan defaults will have an advantage
  • The nature of business will define the interest rates
Below are the interest rates provided by a few banks:
Lenders Interest Rate
SBI 9.75% onwards
Bank of Baroda 8.15% onwards
Oriental Bank of Commerce 9.65% onwards + SP (Strategic Premium)
Corporation Bank 9.90% onwards
Bank of Maharashtra 8.15% + BSS onwards
Andhra Bank 8.20% onwards
Punjab National Bank 9.60% onwards

 These interest rates also will vary at the discretion of the banks and RBI. Also, GST and other fees will be extra imposed on the amount. Click here to learn more about, how to apply for a Mudra loan?

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 must 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.

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Loan Schemes

Mukhymantri Yuva Swarojgar Yojana, MMYSY

The state government of Chhattisgarh is inviting applications under the Mukhyamantri Yuva swarozgar Yojana(MMYSY). Under this scheme, the state government provides financial assistance to such youth who want to set up their own businesses. Therefore, such aspiring youth who are seeking for jobs but cannot find one and thus, want to do their own business, can get a loan up to a maximum of Rs 25 lakh by applying to the department as per rules. Applicants can get information by contacting the District Industries and Trade Center of their district.

What are the Benefits of Mukhymantri Yuva Swarojgar Yojana(MMYSY), Chhattisgarh?
  • The main benefit of this MMYSY scheme is to provide youth with their own livelihood and provide employment to the people through MSMEs. 
  • The Chhattisgarh state government provides loans up to Rs 10 lakh for any service business
  • Rs 2 lakh for small business 
  • and up to Rs 25 lakh for setting up manufacturing industries.
  • The beneficiaries of this scheme are also given a loan waiver of 10 to 25 percent.
What are the Eligibility Criteria for Mukhymantri Yuva Swarojgar Yojana(MMYSY), Chhattisgarh?
  • Candidates should have at least passed 8th from a recognized institution.
  • The prescribed age of the applicant should be 18 years to 35 years to avail this scheme.
  • SC, ST, OBC, Women, Disabled, Entrepreneur and Naxalite affected family members and retired soldiers will get 5 years relaxation in age criteria. 
  • The annual income of the applicant’s family should not exceed Rs 3 lakh.
  • Applicant should be a permanent resident of Chhattisgarh.
  • The applicant should not be a loan defaulter of any national bank, financial institution and co-operative bank. 
What are the Documents Needed for Mukhymantri Yuva Swarojgar Yojana(MMYSY), Chhattisgarh?
  • Aadhar Card
  • Caste Certificate 
  • Business plan/Project report
  • Photograph of the applicant
  • Income certificate
  • Bank passbook
  • Residence Certificate
  • Ration Card
  • Self-Declaration Form  
  • Mobile no. 
How to apply for Mukhymantri Yuva Swarojgar Yojana(MMYSY), Chhattisgarh?

Visit the following website to know more about the scheme