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How To Apply For A Business Loan
By: John Mussi
Worried about how to apply for a business loan? Although it may seem like a
daunting task at first, it can be made less so by careful preparation. When
applying for a business loan, you must prepare a written loan proposal. Make
your best presentation in the initial business loan proposal and application;
you may not get a second opportunity.
Always begin your proposal with a covering letter. Clearly and briefly explain
who you are, your business background, nature of your business, the amount and
purpose of your loan request, your requested terms of repayment, how the funds
will benefit your business, and how you will repay the business loan. Keep this
cover page simple and direct.
When writing your proposal, don't assume the reader is familiar with your
industry or your individual business. Always include industry-specific details
so your reader can understand how your particular business is run and what
industry trends affect it.
Provide a written description of your business, including the following
information:
Type of organization
Date of information
Location
Product or service
Brief history
Proposed Future Operation
Competition
Customers
Suppliers
Management Experience: Resumes of each owner and key management members.
Loan Repayment: Provide a brief written statement indicating how the loan will
be repaid, including repayment sources and time requirements. Cash-flow
schedules, budgets, and other appropriate information should support this
statement.
Existing Business: Provide financial statements for at least the last three
years, plus a current dated statement (no older than 90 days) including balance
sheets, profit & loss statements, and a reconciliation of net worth. Aging of
accounts payable and accounts receivables should be included.
Proposed Business: Provide a pro-forma balance sheet reflecting sources and uses
of both equity and borrowed funds.
Projections: Provide a projection of future operations for at least one year or
until positive cash flow can be shown. Include earnings, expenses, and reasoning
for these estimates. The projections should be in profit & loss format. Explain
assumptions used if different from trend or industry standards and support your
projected figures with clear, documented explanations.
Collateral: Provide a list assets to be held as collateral. Few financial
institutions will provide non-collateral based business loans. All business
loans should have at least two identifiable sources of repayment. The first
source is ordinarily cash flow generated from profitable operations of the
business. The second source is usually collateral pledged to secure the business
loan.
Depending on your particular circumstance you may need to provide one or more of
the following documents:
Lease, Franchise Agreement, Purchase Agreement, Letters of Intent, Articles of
Incorporation, Plans, Copies of Licenses, Letters of Reference, Contracts or
Partnership Agreement.
About the Author:
John Mussi is the founder of Direct Online Loans who help UK homeowners find the
best available loans via thewww.directonlineloans.co.uk website. |
