When you apply for a business loan, you will need to give your lender your bank statements for the last 6-12 months in addition to a few other business loan documents. Lenders use your bank statements to assess your creditworthiness and make their decision to lend to you. In this article, you will learn the purpose of your bank statement in the business loan application process.
What is a bank statement?
Your bank statement is a record of all the transactions made from your bank account.
The first half of your bank account statement contains your bank account information, such as your bank account number, your bank’s IFSC Code, branch etc. The second half of your bank account statement contains a detailed list of all the deposits and withdrawals from your bank account within a given period.
Usually, banks send these account statements to their account holder each month. You can also download PDF or excel versions of your bank statements for any desired period using net banking or your bank’s mobile app.
Here is a sample bank account statement for your reference:
Learn how to download your bank account e-statements.
Why do my lenders need my bank account statements when I apply for a business loan?
When you apply for a business loan, you need to give your lender a few business loan documents. Lenders need these documents to check your eligibility for the loan. The bank account statements are one set of business loan documents you must submit to the lender for them to process your application further. If you use multiple bank accounts to conduct your business, you will need to share account statements of all the relevant bank accounts with the lender.
Lenders use your bank statements to assess your business cash inflows and outflows. They’re checking your business finances to ensure you have enough money in your bank accounts to repay the loan you want to borrow and whether you constantly maintain a certain amount of money in your bank account as a cash reserve.
When you apply for a business loan, lenders do a hard pull of your bureau report to check your credit history. The bureau report gives them a good understanding of your lending and repayment patterns, and this information, when combined with bank account statements, helps the lender develop an in-depth understanding of how you manage your finances.
Through the information on your bank statements, lenders can also check what type of expenses you use your business accounts for and how responsibly you manage your business finances.
Mixing your business and personal finances is never a good idea, and can be a red flag for lenders.
At CreditEnable, we partner with 25+ leading lenders. In addition to other business loan documents, our lender partners your bank account statements from the last 6-12 months to help them decide to lend to you.
When you apply for a business loan using CreditEnable’s technology platform, we will connect you with a lender most suited for your business loan needs. Once we determine your eligibility for the loan, our credit experts will guide you through the entire business loan process, from application to loan disbursement.
If you are ready to start your business loan application and have all the documents ready with you, apply for a business loan with CreditEnable today!
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