What is a Business Loan Proposal?
The business loan proposal is your opportunity to convey your passion for and knowledge of your business to the lender. The elements of the business loan proposal include the numbers mentioned in cash flow reports, revenue projections, balance sheets, personal and business credit histories, P&L statements, bank statements, tax filings, and many other numbers we will discuss.
A strong business loan proposal will also show that your business is currently maintaining good financial standing and offer a reason you think lending you money will be a reasonable risk for the future.
Elements of a Good Business Loan Proposal
Representing your business accurately takes a lot of information. So, you will want to ensure you add your impressive facts and figures inside your business proposal. But also, you will want to keep it as close to a page as possible. You might also be tempted to make use of industry-related jargon, thinking a lender will be impressed. Avoid it!
Here is a list of things that must be included in your business loan proposal:
- Basic information about your business
The first sentence in your loan proposal should often be about you and the amount you are requesting. Then, proceed into more basic info about your business.
- Business name
- Business entity structure such as S-corp or C-corp, LLC, sole proprietor, and so on.
- Time in business
- Existing annual revenue
- Existing number of workers, if applicable
- Little description of your business model
Mention what your business does. How does your business serve the customer? Mention your customer, industry, industry growth, competition, and market base. Ensure you point out how your business gets income. This is so important when a lender is trying to give credits and wants to be sure you can repay the loan.
- Purpose of business loan you want to get
For those looking for an SBA loan, for example, the prospective SBA lender will want to know what you plan to do with the proceeds of the fund you wish to obtain. That is why you should include a comprehensive description of your planned use of the loan in your business proposal. A concise plan for the benefit of funds combined with expected costs and the overall impact the loan will have on the business will give the lender a great picture of your plan, making them more comfortable with partnering with you on your endeavors. For instance, if you plan to buy a massive piece of manufacturing equipment, the lender will want to know about the equipment and the company you are buying.
- Proof of capability to repay your loan
This is the part of the business loan proposal where you discuss numbers. Mention the loan amount you wish to obtain and let the lender see how you plan to repay it. Show this by referring to your cash flow projections, which you have carefully calculated using your previous year’s P&L statements, cash flow reports, and your existing balance sheet. Indicate how you plan to bring in the new debt repayment into your current business budget and show how income will be increased by the new loan to aid that repayment in the long run.
- Information about current business debts (if any)
If you are going for an SBA loan proposal, for example, and currently have other outstanding debts, you’ll need to give detailed information on them. You should add the company or individual’s name, contact information, address, and amount of the debt. You may find this extreme, but remember, the first job of a lender is to make sure that they can reduce the risk they take when lending money out to you.
- Personal and financial background for entrepreneurs
When you choose to write a proposal for a business loan for an SBA loan, you should understand that the lender will desire to see financial details on you and your business partners (if any) and your management team. This may seem too elusive to you, but those who have passed through the SBA small business loan process know how you feel. This implies that they need all of your partners’ names, contact information, and addresses. And you can also get ready to provide tax returns, credit reports, and bank statements.
- Professional background info for your management team
As you collect personal information concerning your management team, you will need to specify whether any of your team members have past management experience that applies to your business. Lenders will want to know the amount of money they’ve spent in the company. Your business loan proposal for an SBA-supported lender should also reveal that your business doesn’t lend money or is involved in passive investments, speculation, gamble, or pyramid sales.
- Links to online marketing platforms
All businesses need a way to advertise and market their product or service. This is where you reveal to the lender that you are proactive in gaining new business. Shortly list all social media sites you use, such as Yelp, Facebook, and so on – together with your website address. Every other method of advertising or marketing you use for industry-specific groups to gain new business, such as those here, is also to be mentioned.
Quickly get a Business Loan with the Help of Experts
Going through the business loan process alone can be daunting. That is why numerous existing and aspiring small, medium, and large-scale business owners partner with JaScott to help them through the process.
Below is what working with us can bring:
- Simplified application process: Instead of wasting your precious time filling out several loan applications for each financial institution, we look for a single application to several lenders.
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