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Tata Capital > Blog > Wealth Services > Documents Required to Get a Working Capital Finance

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Documents Required to Get a Working Capital Finance

Documents Required to Get a Working Capital Finance

If you’re a small or medium-sized business, there almost invariably comes a time when you have to avail an SME loan. Working capital finance, designed to help firms cover daily operational expenses, is a great way to finance the short-term needs of a company. Most companies take working capital loans to tide over fluctuations in seasonal sales or non-steady cash flow. It also provides a cash cushion for companies that are just starting up.

Working capital finance is a popular means of funding because the loan amount is processed quickly, allows for flexibility, let a business choose how to spend the money with minimal restriction, and doesn’t require a collateral. Here are the documents you require to apply for a working capital loan.

KYC Documents

Know your customer, or KYC documents, are critical when applying for any kind of loan. These help the lender determine if a business is legal, and helps them weed out suspicious activities. KYC documents include one proof of identity and address, like your passport, Aadhaar card, NREGA card, or PAN card. Utility bills or bank account statements serve as address proof. Your bank account statements are also important for establishing credibility and indicating your ability to repay the loan.

Business Continuity Proof

You will also need a certificate issued from the bank that certifies the continuity of business for at least three years, including income tax returns and statements.

Financial statements

Your business’s financial statements give the lender a clear picture of your business’s financial condition and its ability to repay the loan. The balance sheet for previous years, profit and loss statements, income inconsistencies, tax audit reports, VAT returns are some documents that you must have ready. Your performance in the current year, and your projected turnover are also required on the official letterhead with all required signatures to attest to the legitimacy of these figures.

Previous loan records and sanction letters

Establishing a good credit history of loan repayment is important as well, and any records of loans taken in the past year should be presented. The Loan Sanction Letter presented to you by the financial institution upon applying for a loan, legalizing your loan approval, is also necessary.

CMA Report

The Credit Monitoring Arrangement report is required for companies with a turnover of more than Rs. 5 crores. It shows the projected turnover and past performance of the company. This allows the lending institution to analyse the financial stability of your enterprise. It also includes an analysis of your balance sheet, compares currents assets and liabilities, profit and loss margins, and includes a fund flow statement as well.

If you’re looking for a SME Loan for your business, choose Tata Capital. We offer attractive and customized working capital finance at affordable rates with easy repayment options. Avail business loan amounts as high as Rs. 50 lakhs. Visit Tata Capital today and grow your business!