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Business Loan Proposal

Loan Proposal

Applying for a small business loan can be exciting and yet

stressful at the same time. For the best results and to heighten

your level of confidence, be prepared when you visit the lender

you've chosen for your business loan interview. After you have

your business plan prepared, start preparing for the loan by

writing a loan proposal to present to the lender.

The loan proposal should state some crucial information, and

many details, about both yourself and your business or business

idea. It should state who you are, how much money you need and

where the money will be spent, how you intend to repay the loan,

and what you plan on doing in the even that you cannot repay the

loan.

The following are key elements to include in your loan proposal.

1. Summary. This should be listed first in your proposal, but

will be written last. It should contain clear, concise,

accurate, inviting information about your business or your

business ideas. It should summarize how the proposed loan will

be used, how it will be repaid, and how it will benefit your

business. Remember your competition in the summary of your loan

proposal, and point out features of your business that are

different from your competitors.

2. Management Profiles. The management profile section of the

loan proposal should explain, most importantly, who you are. Be

prepared to reveal everything about yourself and your

experience. Have a current resumŽ included as part of the loan

proposal, as well as a summary of your skills, qualifications,

and other credentials for yourself, as well as for all other

owners and key members of your management team.

3. Business Description. It's not necessary to state the same

information mentioned in your business plan as in your loan

proposal. However, you do need to present a solid description of

the business. Include a brief history of the business in your

loan proposal, and detail the current activities. If it's a new

business, explain the details of the business that will be

developed. Your goal will to be to clearly demonstrate that you

fully understand your markets, your competitors, and the

industry, including current trends or risks and how you plan to

overcome those potential dilemmas. If the loan is for an

existing business, include literature that details your products

or services, such as current sales sheets, brochures, or

catalogs. Include attachments to your loan proposal for this

section, such as letters from suppliers, customers, or other

business references. Demonstrate through these letters that you

provide excellent customer service, and that you pay back your

creditors.

4. Business Projections. Create at least two years' worth of

projected income statements and cash flow statements. Your

projections should be clearly stated and, most importantly,

realistic in nature. Generally, you probably won't need to

present the "worst case" or "best case" scenario unless the

lender asks for you to write the projections that way. You

should, however, be prepared to answer questions pertaining to

what you'll do if some of your projections don't work out as

planned. For example, if you anticipate obtaining a large, new

contract or customer based on improvements made with the

business loan, and that contract never goes through, it could

change your loan proposal projections drastically.

5. Financial Statements. Your loan proposal should include both

business and personal financial statements. Be aware that the

lender will fully analyze the history of your financial

statements, calculating all ratios. Be prepared to point out any

significant trends you've shown in an introductory paragraph.

6. Loan Purpose. One of the most important parts of your loan

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proposal is a detailed description of how you will use the loan

proceeds. Have a good understanding of the type of loan that you

need, and remember to include the proceeds of the loan in your

cash flow projections, as well as the interest in your projected

income statement.

7. Repayment Plans. Repayment plans should also be stated in

your financial projections section of the loan proposal, but

details of repayment plans should be detailed separately.

Propose the terms you want, and prepare for negotiations with

the financial institution. The lender will consider a number of

factors as they review the overall risk of lending you the

money. Understandably, this will impact the repayment terms that

they are willing to offer for your business.

Especially if your credit is good, and even if your credit is

not so good, remember that in your loan proposal, you are

offering the bank a deal that will make them money. Don't go in

asking the lender for an "allowance." Instead, enter the

interview with your loan proposal objective in mind; namely,

focusing on how much money you'll need, and remove the idea of

going into the meeting wondering how much they're willing to

lend. Never go into a meeting asking for a loan, wondering

whether or not they'll lend to you. If this first lender won't

approve your loan proposal, have confidence that a different

will.

About the author:

Rebecca Game is the founder of Digital Women ®, an online

community for women in business. A 30 year entrepreneur and

dedicated to helping other women find business loans. Visit her

site: Loans

for Women

http://digital-women.com http://loans.digital-women.com