How to Organize a Loan Proposal

culled from:wikihow.com
n today's world, loan fund-raising is becoming necessary for many businessmen, entrepreneurship and consumers those all in need for mechanisms and means that can facilitate way to gain money. in other hand, Starting, expanding or improving on a business requires funding. Oftentimes, a business's funding source is a loan from a bank. Obtaining a business loan is a process that takes time and effort. It requires a thorough presentation of a business's needs alongside convincing proof that the business will be able to pay it back. This presentation comes in the form of a business loan proposal. A proposal is only effective if it results in a loan approval. Therefore, it is important to create a detailed, comprehensive and compelling proposal before heading into the bank with your request for a loan. If you plan on propositioning a bank for your business's financial needs, then you should follow these guidelines for how to organize a loan proposal

Steps

1

) Create a business plan. This is a necessity for any business start-up, so you should already have one in place if you're borrowing to improve or expand your business. Revise and update an existing plan to reflect your current business situation, if necessary.

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   ) Choose the best lender for your business's needs. Instead of submitting a generic loan proposal to any and every lender you can find, choose the lender most likely to cater to your type of business needs and tailor your request for a business loan to that specific lender.
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   ) Develop a relationship with the lender before requesting a loan. to have creditable face and sound records will helps the willingness for loans.
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   ) Open a bank account with your preferred lender. Banks are much more likely to give a loan approval to a loyal customer. this will also facilitates and gives confidence for lenders
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   ) Develop a rapport with the lending institution's loan officer or branch manager.
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   ) Ask questions before preparing your loan proposal.the question are as following;
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   a) What is the bank's policy regarding minimum loan amount?
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   b) What kind of collateral does the bank require?
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   d) Does the bank make business loans for equipment costs? Operating capital?
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   e) What is the bank's Small Business Administration (SBA) department like
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    f) Create your business loan proposal. Using your business plan and all the information you collected about the lender you intend to target, put a proposal together in the following format:
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    The Format
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    Cover letter. This is your first impression. Use it as an opportunity to sell your business, convince the lender to consider you for a loan approval, and outline the star components of your proposed loan and payback plan.
    • Description of loan information. Include the type and amount of loan you desire, the loan terms you are requesting, and your own collateral and equity contributions.
    • Business description. Cover the business history, current status and future plans. Explain how you plan to use the loan funds for your business.
    • Describe your business's marketing strategy.
    • Outline the personnel requirements of your business, being sure to identify the key players and their roles, responsibilities and experience. Also list any outside business professionals and advisers that your company uses.
    • Financial information. This includes tax returns, income statements, balance sheets, debt and income statements and a cash flow projection.
    • Supporting documents. Provide documentation to support every possible statement you make in your loan proposal.
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    Consider any additional information that is pertinent to your specific needs and incorporate it into the proposal.