15 Documents Bankers Need to Grant your Loan Application In Nigeria
You would want any financial institution you approach for loan to grant your loan application. It is that simple yet very complicated. The bank or financial institution you approach would want you to provide them with certain documents and in some cases, collateral.
You should know these documents required to grant your loan application in Nigeria. These documents would be needed to decide on the following:
- The strength of your business and ability to repay the loan and in cases of individual borrowing; your proof of employment and income.
- Legality and structure of your business.
- Your credit history.
- The amount you would need.
- Your tax returns.
For to get your loan approved, you would have to carefully package your loan application form and back it with the necessary supporting documents that we will list below to increase your chances of getting the loan approved. Here are the documents.
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For your bank to grant your loan application, they would request a credit report so as to access your financial worth and ascertain your credit worthiness. It is in your interest to obtain your credit report and see how you are doing financially. This will help you erase any errors or discrepancies in your report before you go to the institution.
This is for those who own corporate entities mostly. Before any financial institution will grant your loan application, your financial statement would be asked for. You have to give them the statement containing your financial history in the past 3-5 years. They will then review key elements of your financial statement such as:
- A list of your business assets and liabilities
- Income statement
- Cash flow statement
- Balance Sheet
- List of debtors and creditors
If your business entity has a consistent positive growth, you are most likely going to be considered.
Any would be lender would want to see your bank statement before they will grant your loan application. Your bank statement will show them certain things about you. Your spending habit, your income, your existing loans and general financial strength. Avoid the following things to increase your chances of getting the loan.
- Negative Balances-: Negative balances happen because of over-drawing your account. Your prospective lenders may likely take excess negative balances in your account to mean a lack of proper financial management skills and this may have consequences for you.
- Untraceable cash deposits-: Money coming in and out of your account should as a matter of fact have a verified source. Your bank statement is taken as a proof of your income and financial liquidity and untraceable deposits may seem like you are trying to inflate your earnings. So, in the months preceding your loan application, you will do well to keep your bank account clean of any untraceable cash or at least be able to explain the source.
Your business plan is essential if the banks will consider you. To grant your loan application, your business plan will check your ability to pay back. It will reveal the following:
- Your vision and goals for the business
- Your financial forecast to reveal how the business would recoup the funds when injected into the business
- Your repayment plan
- How you would attract customers to the business
- Your competitors and how they may threaten your business
- The level of risk they would be taking by investing in your business
You should therefore make sure you have a good business plan.
5. Business Incorporation documents and Business Profile
To grant your loan application, the institution will require your company incorporation documents to show who the owners are, the structure of your business and how profits and liabilities are shared.
6. Title Documents of Assets
This is to ascertain the validity of your collateral. You know you would be required to present collateral and most time, assets are used as the collateral. You would be required to present documents that will verify the ownership of the property that you are presenting before they will grant your loan application.
7. Proof of Tax Payment
Your tax payer ID number and evidence of tax filings would also be required to prove that you are fiscally responsible. For your bank to grant your loan application, they will have to know that you don’t have any tax liabilities.
8. Proof of Insurance
In cases, the financial institution would want to present prove of insurance for the property you are using for collateral before they will grant your loan application.
9. Payment Slips
Again, banks may also require payment slips for up to six months as proof of income for individual borrowers.
10. Marketing Plan
You should have a marketing plan. It is quite different business plan. They banks sometimes would want to be sure that you have carried out diligently a study on how you are going to sell your products and services. They would require this before they will grant your loan application. You have to know who your customers are and the target market and how you intend to reach your customers and beat your competitors.
11. Valuation Documents
For people who are borrowing money for development of property, mortgage and other real estate loans, your valuation document would be needed to determine the value of the property.
12. Survey and Building plans
For building loans, you will be required to submit your survey plans.
Survey plans are also required for building loans.
13. Bill of Quantity
Another document needed to grant you loan application for real estate and construction loans is bill of quantity. It is a document that itemizes the materials, labor and costs of constructing or refurbishing a structure.
14. Management Profile
The people who will be in charge of managing your business are also important. The financial institution would want to know the qualification and experience of the people you would put in charge of managing the funds when it is eventually released. The profile of the key managers would be needed by the bank.
15. Lease agreements and Franchise Agreements
These are seen as the most common documents used to back loan applications. Make sure that you gather them (as applicable) and have them ready before you apply for loans.
Getting a bank to grant your loan application is one of the most difficult things to do. It can however, be done easily. It is all down to how prepared you are for it. Build your reputation and all will be well.