Lenders — whether banks or NBFCs — require specific documents during a business loan application process to evaluate risk, verify authenticity, and assess repayment capacity. Here’s why each type of document is important:

1. KYC Documents (Identity & Address Proof)

To verify the identity of the applicant and ensure there is no fraud. It also confirms the legal residence and business address.

2. Business Registration Proof

To validate the legal existence of the business and its structure (sole proprietorship, partnership, company, etc.). It confirms that the applicant is legally allowed to operate.

3. Bank Statements

To assess the cash flow and liquidity of the business. Lenders use this to understand income consistency and financial health before approving a loan.

4. Income Tax Returns (ITR)

To check the profit declared by the business and confirm income over the last few years. This helps in determining the repayment capability.

5. Financial Statements

To evaluate the overall financial performance of the business — including revenues, expenses, and net profit. These statements indicate whether the business is growing and creditworthy.

6. Loan Application Form

This is a formal request for the loan and includes critical details like the amount, purpose, and repayment plan.

7. Photographs

Used for official documentation and identification, especially in physical file processing or for biometric records.

8. Ownership/Office Address Proof

To confirm where the business is being operated from. It helps lenders physically verify business operations if required.

9. Credit Report

To check the applicant’s past repayment behavior and creditworthiness. A good CIBIL score improves chances of loan approval.

10. Additional Documents (Quotations, NOC, Project Reports)

Specific to the type of loan. For instance, machinery loan quotations help verify the purpose of funds, while project reports are crucial for startup loans.