How to Write a Business Loan Proposal
Lenders like to see a written proposal when a candidate applies for a business loan. A business loan proposal is an important component of a loan request. It offers you the chance to emphasize on the most important features of your business and to convince the lender that you are a perfect candidate for a loan. Learn how to create a business loan proposal that can get the lender to act on your loan request.
- Explain how you intend to invest the money and your intended use for the proceeds. If the loan will be used to buy major equipment for your company, explain how the equipment will help improve your company's productivity and its profits. If you are purchasing replacement trucks, explain to the lender how the newer models are better in terms of effectiveness and maintenance costs.
- Give a detailed description of your business. Give the story of how the company started and its progress through the years. An updated copy of your company's business plan can provide proof of this. Make sure you include updated summaries of your company principals and other important personnel. Provide names of important outside board members such as attorneys, directors, consultants and accountants.
- Provide complete financial information. Review the forms in the loan package to know the specific requirements of the bank or commercial lender. Generally, lenders require annual financial statements which include income statement, balance sheet and the statement of cash flows covering the last three years, the current year's financial statement and the most recent tax returns. Have the financial statements prepared by a certified accountant. You should also include statements of income projections and expenses for the next three years.
- Draft a brief cover letter to include in your loan request package. Use the letter to give a summary of the main points of the loan proposal. State the amount requested, the purpose of the loan, state whether the loan is a revolving credit, term loan or another type, the collateral for the loan, the maturity date and the names of guarantors.