S.T.E.P.S. – Smart, Tailored, Event-Driven, Packaged Solutions
Applying for a Bank Loan — Part VII
Once you’ve decided which loan meets your needs and you’re ready to apply, you will have to gather the required documentation. Documentation is an important word in banking — the ability to produce it can maximize your borrowing ability. When applying for a small-business loan from a bank, you’ll need to provide both a business plan and a loan proposal. We’ll cover each of these next.
Business plan outline
Collect your research and data and prepare a solid business plan. Your business plan is the blueprint of your company. It lays out a strategic vision and is the basis for sound decision-making. It dictates how you allocate resources and how you measure the result. The plan is often broken down into two areas:
- The business – usually includes:
- Revenue model
- Market opportunity
- Target market
- Product
- Differentiating factors
- Product development
- Sales, marketing, and positioning
- Competition
- Key management
- Board of advisors
- Future growth opportunities
- Financial data — usually includes:
- Income statement; current and three-year projected
- balance sheet
- statement of cash flaws
Loan proposal
Your loan proposal should include:
- Executive summary for loan proposal: what you are using the loan for and why
- Personal background
- Audit history
- Corporate history
- Summary of loan request
- Cash flow discussion
- Collateral discussion
- Capital
- Credit history
- Character references
- Sources of repayment
- Financial statements
- Projected statements
- Projected banking needs
- Long-term scenario
- Concluding remarks about loan, company, and bank
Other documents
In addition to your business plan and your proposal, you should be prepared to submit the following as well:
- Corporate history
- Itemized summary of loan request – purpose of loan and use of funds
- Collateral information
Continue to: Part VIII. Special assistance programs