The term-loan document checklist — what a Surat bank actually asks for, and why

In this article

A file is five questions, not fifty papersGroup 1 and 2 — who is borrowingGroup 3 and 4 — what the business has earned, and how it behavesGroup 5 and 6 — what the money buys, and what backs itThe order in which to collect themBefore you walk into the branch

A Pandesara saree-processing house wants ₹1.2 crore to add a new stenter and effluent-treatment upgrade. The owner arrives at the branch with a folder of "everything", and three weeks later the file is still with the branch because nothing in it lines up. The folder was full. It just wasn't built around the questions the bank is trying to close.

A file is five questions, not fifty papers

When a bank asks for documents it is not collecting paper; it is closing questions. Who is the borrower? What has the business earned? How does it handle money? What will the loan buy? What stands behind it if things go wrong? Once you see the file this way, a long checklist becomes six small groups, and a missing paper becomes a specific unanswered question rather than an irritating demand.

One caution before the list: there is no single national checklist. Each bank, and each loan scheme within a bank, has its own. What follows is the typical core for an MSME term loan. Treat it as the list to prepare against, and ask your branch for its own list in writing so you can tick against it. Verified as of October 2026 — confirm current terms before applying.

Group 1 and 2 — who is borrowing

KYC means "know your customer": the identity and address proof the bank is legally required to hold. For a firm that is PAN of the entity, and PAN, Aadhaar, photographs and address proof of every proprietor, partner, director and guarantor. Each of these people will also be asked to sign a consent so the bank can pull their credit bureau report — see our note on what a bureau report tells the bank.

Entity papers prove the borrower exists in law and has authority to borrow: the registered partnership deed or the company's MOA/AOA with a board resolution authorising the loan, the Udyam registration (which also decides MSE treatment under RBI's lending directions), the GST registration and any trade licence. Example: a Ring Road textile trading partnership whose deed still lists a partner who retired in 2022 will be asked for a retirement deed before anything else moves.

Group 3 and 4 — what the business has earned, and how it behaves

Financials are the heart of the file: income-tax returns with computation and the audited (or, below audit limits, prepared and signed) balance sheet and profit & loss for the last three years, a provisional statement for the current year to date, and the forward-looking part — the project report with projections and, for working-capital limits, the CMA data. The bank reads the three years as a trend: is turnover rising, are margins stable, is the owner's capital growing or being drawn out?

Banking and GST are how the bank tests those financials against reality. Twelve months of statements for every account the firm operates, twelve months of GSTR-1 and GSTR-3B, and the statements and sanction letters of any existing loans. This is where inconsistency shows: if GST returns show ₹3.6 crore of sales but the bank credits show ₹2.1 crore, the file stops until someone explains it.

A missing document delays a file. A document that disagrees with another one can end it.

Group 5 and 6 — what the money buys, and what backs it

Project papers prove the money goes where the report says. For machinery: dated quotations or proforma invoices from the supplier, ideally two for comparison, with specifications and GST shown separately. For civil work: an engineer's estimate. For premises: ownership papers, or a rent agreement long enough to outlast the loan tenure. Textile processing, dyeing and chemical units will also be asked for pollution-board and other statutory consents relevant to their activity — and it is those, not the accounts, that often set the sanction date.

Security and net worth is what the bank falls back on. Each promoter and guarantor gives a net worth statement listing assets and liabilities, supported by property papers, FD receipts and similar proof. If property is offered as collateral, expect a title deed, a legal search report, a valuation by the bank's empanelled valuer and an insurance cover note. Note that not every loan needs this: under RBI's amended MSME lending directions, loans to micro and small enterprises up to ₹20 lakh sanctioned or renewed from 1 April 2026 must be collateral-free, and the CGTMSE guarantee opens a collateral-free route for larger amounts. Collateral-free does not mean paper-free — KYC, financials and project papers are still required.

The order in which to collect them

Do not collect in the order of the bank's list; collect in the order of how long each takes. The slow papers are title search and valuation (days to weeks, and not in your control), supplier quotations (suppliers delay), statutory consents, and the final audited accounts if the year has only just closed. The fast ones — KYC, bank statements, GST returns — can be downloaded in an afternoon, so leave them for last, when they will be freshest.

Then do one reconciliation before submission. Put GST turnover, bank credits and balance-sheet sales for the same year side by side. Where they differ, write a one-paragraph explanation (advances received, cash sales, a bill raised in March but paid in April). A difference you explain is a normal business; a difference the bank discovers is a question about you.

This article is general information, not professional advice. Rules change; verify current provisions or contact the office for advice on your situation.