It can be both exciting and stressful to apply for a small business loan. To get the best results and increase your confidence when meeting with the lender, prepare. Once you have prepared your business plan, prepare a loan proposal that you can present to the lender.
Your loan proposal should include important information about you and your business. It should describe who you are and what money you need.
These are the key elements you should include in your loan proposal.
This should appear first in the proposal. It will not be written until the end. This should include clear, concise, accurate and inviting information about your company or business ideas. It should describe how the loan will work, what it will cost, and how it will help your business. Your competition should be considered when composing the loan proposal summary. You should also highlight features unique to your business.
2. Management Profiles.
Your management profile should include information about you, your experience, and most importantly, who are you. You should be prepared to share everything about you and your experiences. As part of your loan proposal, include a current resumZ and a summary about your skills, qualifications and other credentials.
3. Business Description.
You don’t have to include the same information in your loan proposal as in your business plan. A solid description of the business is required. Your loan proposal should include a brief history of your business and details about current activities. If you are developing a new business, please explain the details. You will need to demonstrate that you are knowledgeable about your market, your competitors and the industry. Also, be sure to discuss current trends and risks. Finally, show how you plan on overcoming those challenges. Include literature detailing your products and services if the loan is for an established business. For this section, attach any attachments such as letters from customers, suppliers, or other business contacts. This section will demonstrate that you are a customer-oriented company and that you have paid your creditors.
4. Business Projections.
At least two years worth of cash flow and income statements should be created. You should clearly state your projections and be realistic. You won’t usually need to present the “worst” or “best” scenario unless your lender requests it. However, you should be ready to answer questions about what to do if your projections fail. You might be able to change your projections if, for example, you don’t get the contract.
5. Financial Statements.
The loan proposal must include both personal and business financial statements. Remember that your financial statements will be thoroughly reviewed by the lender, who will calculate all ratios. In the introductory paragraph, be prepared to mention any notable trends.
6. The purpose of a loan.
A detailed description of how you intend to use the proceeds of your loan is one of the most important aspects of your loan proposal. Make sure you have a solid understanding of the type and amount of the loan you are looking for.
7. Repayment Plans
Your financial projections section should include details regarding repayment plans. Prepare to negotiate with the financial institution. As they assess the risk of you lending the money, the lender will take into account a variety of factors. This will affect the terms they offer you for repayment.
Even if you have good credit, or even if it isn’t, don’t forget that your loan proposal is an offer to the bank that will make them money. Do not ask the lender for an “allowance”. Instead, go into an interview with your loan proposal goal in mind. This will help you to eliminate the temptation to ask for an “allowance.” Do not ask for a loan and then wonder if they will lend you money. You can be confident that another lender will approve your loan proposal if the first lender doesn’t approve it.