Great Loan Propsoal Tips

There are several loan proposal tips that will help a business owner get through the process of putting together a loan proposal. Especially for a new start-up business has always been harrowing process, and one that has to be extremely organized. Now that poor economic conditions have been thrown in, and lenders clamping down funds to be loaned, the proposal has to take on new meaning.

Putting Together a Great Proposal

A business loan proposal needs to start off with a cover letter including a concise description of the business and how the loan will be used. Make it easy to read, with bullet points noting your reasons, to create clarity. It is also important to note in this initial description the time frame in which the amount can be repaid. Lenders want to know that they are looking at a secure project that will have long term growth.

The next step will be the proposal itself. Some of the same information from the cover letter will be repeated. The proposal needs to include the following pieces of information:

  • name and location of the business, and mailing address if different
  • the exact amount of money being asked for needs to be presented and detailed in how it will be spent
  • name and social security numbers of all principals involved
  • business description and structure - mission, staffing, detail of day to day operations, sales to date (if applicable) or sales projections.  A management profile will be important to include that shows leadership responsibility. This section will be extremely detailed and well thought out.  Any successes or awards should be shared here in order to show off what makes the business more outstanding.
  • marketing plan and demographics - This section includes who the competition is and how they can affect the business. A customer demographic should be included, as well as any current client base to further illustrate success. Marketing and advertising strategy is important to include in order to prove dedication and how success will be achieved.
  • financial statements - These need to be submitted for all the partners or principals involved. There should be statements for the last 3 years if possible, or an accountant should put together detailed projections if this is a new business. Attention to detail is imperative in this section to further express why this loan should be approved and why the bank should invest in the venture.
  • repayment plans - the final part of the proposal should detail how and when the money will be repaid. Any detail of collateral for the loan should also be included as part of the conclusion. Personal guarantees and detailed lists of assets can be used as collateral.

A successful loan proposal is a very detailed business plan that the bank or other lenders will look over for consideration. Special attention to all the figures and facts are the elements that create a successful plan. While all this detail is important, it should be easy to read and not too wordy, as this causes distraction from the necessary information. Before submitting a loan proposal, have an attorney check the information for accuracy.