Your business might trudge through situations wherein it needs money for growth and expansion. Even when you wish to meet your expenses and pay your long-standing dues, you might need to apply for business loans.
A strong relationship may be established between your company and a banker once you propose a small business loan. Your business has to be presented in a very positive manner, and you’ll need to draft the necessary documents.Your ultimate objective is to convince your banker about your financial strength and your ability to repay a business loan.
Share the business plan in your loan proposal
Planning constitutes a major segment of your business loan proposal. Find your time to research and create a proposal. Make sure it addresses the following sections:
- Executive summary—this section is about developing a business overview to be precise. It gives out a small summary of your business, the industry you’re in and the comparative advantage. Apart from mentioning the amount of loan, you must also mention a description of the project and other associated business needs.
- Description of the company—the key segment of your business plan should mention your business history, latest operations and business strategies.
- Management team experience—State the efficiency of all decision makers. Mention their qualifications, experiences, and skills in details. You should inform your banker on why your project seems so effective.They should also know how you have planned on making things work.
- Key financial data—the strength of your business finance gets reflected in this section. You must share your plan for the next couple of years besides providing financial statements. In order to determine your capacity of repaying the borrowed amount and identify your track record, your information needs to be analyzed by the banker very closely indeed. Maintain transparency and honesty through every segment of your loan request.
- Marketing plan—Address the most important questions by providing your marketing plan. You must mention whether there’s any time-tested market for your service or product. Who all are your competitors? What is your major competitive edge?
- Production plan—your operational capacity to cope with the increasing sales volume has to be shared with the banker.
- Human resources management—your capacity to hire, train and retain human resource for promoting your business to the next higher level has to be demonstrated.
Documents in support of your proposal
Besides mentioning the credibility of a plan, you must produce considerable proof in support of your commercial loan application. Such information may include:
- Your market research that developed your business ideas
- Documentation on your financial strength e.g. estimates from a subcontractor, lease copies etc.
- Testimonials of a client
- Reports on your company as draw by the media
The objective of producing documents in support of a proposal is to prove that it’s actually dependent on facts. Once the loan provider achieves a vivid picture of your financial situation, he is bound to gain more confidence on you. By proving your financial strength, you’ll move closer to getting your business loan approved.
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