Line of Credit
Line of Credit is usually an agreement between the lending institution (generally a bank) and a customer
Line of Credit is usually an agreement between the lending institution (generally a bank) and a customer wherein the bank permits a defined maximum amount of loan to it's customer. This amount can then used by the buyer to buy goods or services from vendors. The borrower can withdraw money till he or she reaches the limit defined and agreed upon with the bank.
The advantage of the Line of Credit is unlike regular loans the borrower is not supposed to pay any interest on the part of the Line of Credit which is unused. It means that the lending institution would calculate the interest only on the portion of the credit Line used or drawn by the customer. Obtaining the line of credit is much sought after method by the business community where frequency of payments is higher.
The borrower and/or the guarantors have to provide the following documents to the banks or the lending institutions while submitting Line of Credit Application. Certain documents may be demanded by the bank or the lending institutions in post sanction phase or on periodical basis.
- Address Proof : Latest Electricity/Telephone Bill or Receipt of Maintenance Charges or Valid Passport or Voter?s Identity Card or Purchase/Lease Deed/ Leave & License Agreement of Residence or Office Premises.
- Identity Proof : Valid Passport, PAN Card, Voter?s Card, Any other photo identification issued by Government Agencies.
- Business Proof : VAT/CST Registration No. or MIDC Agreement or SSI Permanent Registration Certificate or Warehouse Receipts or Shop & Establishment Act Certificate or Copy of Lease Agreement along with the latest Rent paid Receipt.
- Business Profile on Company?s Letterhead.
- Partnership deed in case of partnership firms.
- Certificate of incorporation, Date of Commencement of Business and Memorandum of Title Deeds, Form 32 in for Addition or Deletion of Directors in case of companies.
- Last three years Trading, Profit & Loss A/c. and Balance Sheets (duly signed by a Chartered Accountant wherever applicable).
- Last one years? Bank statement of the Firm.
- If existing loan, then sanctioning letter and repayment schedule of the same.
- Firm/Company?s PAN Cards.
- Individual Income Tax Returns of the Individual/Partners/Directors for last three years.
- Last one years? Bank statement of Individuals, Partners, Directors .
- SEBI formalities in case of listed companies.
- Share Holding pattern of Directors duly certified by a Chartered Accountant.
- List of the Existing Directors of the company from the Registrar of the Companies.
