Business loan documents checklist

Why consistency matters more than volume

A lender's credit team compares your documents against each other. Turnover in the income-tax return should be close to turnover in GST returns. Bank credits should broadly match sales. Debtors and stock in the balance sheet should match your stock statements. When these disagree without explanation, the file slows down or is rejected — even if the business is sound.

Before applying, sit with your CA and check that the numbers tell one story.

The checklist

Depending on the loan, lenders may also ask for property papers for collateral, existing loan sanction letters and repayment schedules, projections, and quotations for machinery or vehicles. Requirements vary by lender and scheme.

Debtors and stock statements for CC limits

For a cash credit or overdraft limit secured on stock and receivables, the bank sets drawing power from your stock and debtors — usually monthly or quarterly. A typical statement looks like this:

Debtors older than the bank's cut-off often do not count. Faster collections directly increase how much you can draw. Your sanction letter sets the exact method and margins.

What lenders look at in your numbers

• Profit trend: stable or rising profit over 2–3 years.
• Repayment capacity: whether cash profit comfortably covers existing and new EMIs.
• Working capital cycle: debtor days, stock days and creditor days. See working capital cycle explained.
• Bank conduct: cheque returns, overdrawn days, and whether credits are steady.
• Leverage: total borrowings against capital.
• Credit history: the owners' and the business's repayment record.

If these are unfamiliar, start with how to read a balance sheet.

Common reasons files get delayed

• ITR turnover differs from GST turnover with no reconciliation.
• Large cash deposits without explanation.
• Provisional figures for the current year missing or hand-written.
• Stock statement figures far from the balance sheet stock.
• Unsigned or unaudited financials where audit was required.
• Personal and business transactions mixed in the same account.

Keep a ready loan file all year

Most owners collect documents in a hurry when the bank asks. A better habit is to keep a loan file updated every quarter, in a shared folder your accountant can maintain:

• Latest ITRs and financial statements, signed.
• GST returns, saved month by month.
• Bank statements downloaded each month for every account.
• Quarterly provisional P&L and balance sheet.
• Debtors and creditors ageing and stock statement as on each quarter-end.
• KYC of all partners or directors, refreshed when anything changes.

When a renewal or a new limit comes up, the file is ready in a day rather than a month, and the numbers are already reconciled. It also helps when you want to compare offers from more than one lender quickly.

Preparing a month before you apply

1. Close the books up to the latest month and reconcile all bank accounts.
2. Clear old suspense entries and unadjusted advances.
3. Prepare a turnover reconciliation between books, GST returns and ITR.
4. Pull debtors and creditors ageing; chase very old debtors.
5. Get provisional financials signed by your CA.
6. Collect KYC for all partners or directors in one folder.

See preparing for a meeting with your CA for how to make that conversation efficient.

Pulling the numbers with Tally and Cashflow OS

Cashflow OS gives you the reports lenders ask about, synced from Tally: Profit & Loss, Balance Sheet and Trial Balance for any period, bill-wise receivables and payables with ageing, stock summaries, and cash and bank books. GSTR-1 and GSTR-3B views help you compare books with GST figures. Export to Excel or PDF to share with your CA or banker. Cashflow OS does not apply for loans or connect to lenders. See reports in Excel and PDF.