Preparation is key when applying for a business loan. Before a lender accepts your proposal, they will want to learn more about your company, its performance, and finances. To increase your chances of success, you must organize your paperwork to prove you are a reliable candidate for a loan. If you need to inject money into your business, read the following advice on how to create an impressive business loan proposal.
Write a Professional Business Plan
A lender will fail to take your proposal seriously if you don’t have a business plan. It will prove you have a firm understanding of the steps you need to take to generate a healthy annual revenue, which will increase the likelihood of you repaying the loan on schedule. Also, the business plan must state how much you would like to borrow, how you will spend the money, and how you will pay back the amount in full.
Gather Various Business Records
A lender will request to review various business records to make an informed decision. In addition to checking your business credit report, they will more than likely want to view your federal tax returns for the past three years.
Also, they may request your balance sheets and profit and loss reports for the past three years. For this reason, you must ensure your company’s books are in good order and your taxes are paid in full and on schedule. If organizing financial paperwork is a struggle for your business, turn to Brown Smith Wallace, a top accounting firm, to handle your business taxes, bookkeeping, payroll, and more.
Highlight Your Company’s USP
A lender will want to fund a business that stands a good chance of success in an industry. If you can’t differentiate your company from its rivals, they might question if your business can generate a large profit.
Convince a lender to accept your business loan proposal by highlighting your company’s unique selling proposition (USP). Point out the various features that will separate a product or service from your rivals.
Articulate the Business Goals
Articulate the business goals to prove to a lender you have an in-depth plan for their funding. For instance, you could state you would use the loan to invest in brand-new business equipment to decrease production costs, which will increase your company’s profit margin. As a result, this will provide a lender with the confidence that you will repay the loan amount on schedule.
Organize Personal Financial Records
A lender will not only review your business accounts but may want to learn more about your personal finances. Organize your financial records before applying for a loan. For example, you must provide a credit report with your FICO score and a financial statement with your personal assets, liabilities, and net worth.
Prove you have exceptional attention to detail by placing the above documents in a binder, which can help them review your detailed, organized paperwork with ease. Also, include an executive summary to provide a brief overview of your business and its financial requirements.