Preparing a written loan proposal
To apply for a loan you will need to create a written loan proposal. A loan proposal will allow you to tell the lender why you deserve a loan and how you will be able to repay the money that is leant to you. The way the loan proposal is organized and the way in which it is presented will be able to show the lender why you are a trustworthy investment and why they should consider taking a risk on your company. Here are the things you want to follow when you are preparing a written loan proposal.
The first thing the loan proposal needs to have is an executive summary. This must impress the lender right off the bat because you aren't going to get a second chance with the lender. What information should you include in the executive summary? You will want to start with a brief explanation of who you are and what your business is all about. Include the products you will see and an overview of the company because it will help lenders to get a better idea of your company and how you will repay the loan. This part of the loan proposal needs to be simple and it needs to be direct.
After the one-page brief description you will then want to start including more information about the business. Include a business description that is a little more in-depth. This description will include information about the company that pertains to what your products are and how many employees you will need to bring on. You also need to include other information like the location and proposed future operation area and future needs. Lenders also want to see that you have competition and how you will plan to take on the competition and become successful in your particular industry.
Lenders want to see what drives you and how you will move the company forward. You will need to include information about your company's management experience, even if it doesn't come only from you.The management section includes your resume and background experience and also the experience of the employees that you have already hired on for the company.
After you tell the lenders all the reasons why they should offer a loan to you, they want to see your financial statements. Most small business owners will need to provide financial statements of their personal records as the SBA and most lenders ask for about 20% or more guaranteed in order to offer you the loan. You need to provide your Federal tax return statement along with 3 months worth of bank statements so the lender can judge your loan worthiness.
Loan Repayment abilities
How are you planning to repay the loan? This plays a big role in your ability to get the loan as lenders will want to check on how you will market and how well you will be able to get the money you borrow back into their hands. Include your repayment sources and the time requirements you will need in order to repay the loan. The information you include will be your budgets, cash-flow projections, and other financial records that will be able to easily support your loan proposal.
Before you turn in a written loan proposal, you will want to take the time to review other loan proposals. This will allow you to see the basic setup of a loan proposal and it will make it much easier for you to create a convincing loan proposal where you will actually be able to get approval for the loan.