When you apply for a business loan, your lender checks your creditworthiness for the loan by carefully analysing your financial documents, such as your bank account statements and balance sheets. These documents help the lender determine whether you can repay the loan you need. Depending on your company size and business constitution, your Audit Report is on the list of business loan documents a lender will require. Read on to learn what an Audit Report is, why a lender needs it as a business loan document, and how it is used to evaluate your creditworthiness.
What is an Audit Report?
A certified CA prepares an Audit Report. It is a report of their opinion on your company’s financial statements and whether they comply with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013 and are free from material misstatement. An Audit Report comprises an audit of your company’s balance sheet, profit and loss statement, and cash flow statement for a particular auditing year.
Here is a sample audit report for your reference:
Your lender may ask you to submit your Audit Report based on your business type. If your business constitution is “Company”, lenders can ask for a Statutory Audit Report. If you are an Individual, LLP, or Partnership Firm, they require your Tax Audit Report. And if you are an LLP, you may need to submit an Audit Report under the LLP Act (if applicable).
Why do my lenders ask for an Audit Report when I apply for a business loan?
When you apply for a business loan, your lender will ask you to submit some business loan documents with your business loan application. They require these documents to assess whether you are a creditworthy business that can repay a loan on time. An Audit Report is one such business loan bank document. Audit Reports are assumed to be free of misstatements since they are prepared by a certified CA. An Audit Report contains an auditor’s opinion on your bank statements and financial statements and becomes a reliable source for lenders to assess your company’s financial status and stability. Some lenders will ask for at least 3-years of Audit Reports. The reports help them analyse and understand your company’s financial behaviour and health over a few years and draw substantial learnings about your finances.
When you apply for a business loan with CreditEnable, we match you with one of our 25+ lender partners who is best suited for your business loan needs. We also tell you upfront what business loan documents you will need to submit. The sooner we have your documents, the faster our credit experts can assess your profile and find your perfect business loan.
Once we determine your eligibility for the loan, our credit experts will guide you through the entire business loan process, from application to loan term negotiation and disbursement, to ensure you get the best possible business loan terms and ROI.
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