Friday 21 September 2012

How to Write a Loan Proposal


Approval of your loan request depends on how well you present yourself, your business, and your financial needs to a lender. Remember, lenders want to make loans, but they must make loans they know will be repaid. The best way to improve your chances of obtaining a loan is to prepare a written proposal. A well written loan proposal contains:

General Information

· Business name, names of principals, Social Security number for each principal, and the business address.
· Purpose of the loan - exactly what the loan will be used for and why it is needed.
· Amount required - the exact amount you need to achieve your purpose. Business Description
· History and nature of the business - details of what kind of business it is, its age, number of employees and current business assets.
· Ownership structure - details on your company's legal structure.

Management Profile

· Develop a short statement on each principal in your business; provide background, education, experience, skills and accomplishments.

Market Information

· Clearly define your company's products as well as your markets.
· Identify your competition and explain how your business competes in the marketplace.
· Profile your customers and explain how your business can satisfy their needs.

Financial Information

· Financial statements - balance sheets and income statements for the past three years. If you are starting out, provide a projected balance sheet and income statement.
· Personal financial statements on yourself and other principal owners of the business.
· Collateral you would be willing to pledge as security for the loan.


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