Business Loan Proposal

Business loan proposal is a detailed report based on a borrower's loan application and creditworthiness that is usually presented by a bank officer to a bank loan committee to to justify a lender's application for loan.

Loan proposal is very relevant when applying for loan. This is because in addition to a standard loan document the lender expect to see a written proposal for a loan application.

The proposal is an opportunity for you to highlight the most exciting aspect of your business. Dont forget that first impression matters much. Use your proposal to prove to your lender that you are the right candidate for the loan.

When making a loan application some lenders may not ask for a business loan proposal, take the initiative and prepare one. It will give you competative hedge because it shows the lenders that you are professional about the loan.

How to write a business loan proposal

Cover Letter

Prepare a cover letter for your proposal. The cover letter is a brief introduction of all the various part of your proposal. It is normally the last part of the proposal to write. The cover letter contain introduction of your company, the amount of loan requested for and the purpose of such loan.

Business Description

Give a description of your business,give detailed information about its structure, State whether your business is new or already extablished.It is important to give information about the legal form of your business. Is it a sole business or a partnership? what are each partners liability? Include information on your business past and present performance.Dont forget to include general information including the company name.

Market Information

What is your market size? Market size refers to the number of buyers and sellers in a particular market. The sales values and volumes makes up the total market size. Let your investors know the market trend. Market trend refers to the general movement of a market.Market size and trend are very important to an investor because it makes the understanding of the total market of goods or services easy. Who are your competitors? Dont forget to add your market profitability.

Purpose of the loan

It's time for you to tell your lender the purpose of the loan. No body will give you a loan for a purpose that is not genue. Before writing this part of the proposal make sure you have done your homework very well. Make sure your figures are correct.

Financial Information

If your business has been in opperation, submit your last three years financial information. If it is a new business or you are about starting provide projected income statement, cashflow and balance sheet. Dont forget to include information on the colataral for the loan.

The next step will be to proofread the document, check for spelling and error on your grammar. 

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