How To Write a Business Loan Proposal

Whether you are just starting a new business or you realize that your business needs some extra capital to grow and expand, a business loan proposal is probably in order to help you achieve your dreams.  You can learn the basics of applying for one of these loans from this article, but to really get an in-depth understanding of the language that lenders expect to see in these proposals, it's probably a good idea to pick up some online business classes.

It is necessary to write a business loan proposal when you apply for a business loan.  This is where you should highlight the most promising aspects of your business to help increase the chances that you receive the loan.

  • You need to submit a brief introduction with your proposal.  This is sort of like a cover letter.  This should mention the basics of the company such as purpose of the company, size, loan amount, and purpose of the loan.
  • Start the proposal with the basics including, the company name, company address, employee names, and social security numbers of the principals.  Talk about the purpose of the business loan, the exact amount needed, and specific plans for how the money will be used.  This is extremely important.  Do not ask for more money than you truly need.  The loan officer will be able to tell if you are asking for too much money.  This could potentially backfire in the end.
  • Talk about your business in detail.  Mention prior and expected performance in terms of sales and revenue.  Discuss what makes you unique and what your competitive advantages are.  It is necessary to mention the legal and ownership structure here too.
  • Talk about your competitors.  How are you similar? How are you different? Do you really have an advantage? What is the market share for your competitors? What is your market share?  Talk about your current customers.  What is the monthly revenue?
  • It is often necessary to submit information for the past few years.  Three is usually acceptable and required.  If you are just starting out, you need to provide projections for balance sheets and income statements.  Include personal financial statements of the individuals who are going to be involved with this business.  Mention possible collateral too.  This is extremely important in case you do unfortunately default on your loan.
  • Make sure that your business loan proposal is perfect.  Proofread it several times.  Check for grammar and spelling.  Look over all of the facts and information contained in the proposal, and make sure that everything is correct.

Submit your business loan proposal with each copy of the loan package.  While you're waiting to hear back, you can sign up for online business management classes so that if your proposal is accepted, you'll have the education and preparation to move ahead.

Good luck with your business loan proposal!


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