In case you are looking to open, or expand your existing small business, you’ll need to apply for a small business loan. When applying for a small business loan, you’ll need to have documentation to accompany your small business loan application.
Some of the paperwork you will need to provide to the lender is a business proposal document, business financials document, and a loan repayment plan as well as any required documents requested from the bank.
Business Proposal Document
Before submitting your small business loan application, you’ll need to create a business plan. The business proposal should deal with the project you are looking to fund. It should reveal to the lender that you know the market and products that you are offer.
Give the lender some perception as to what you are trying to do. A basic business proposal will include a summary (which affords a high-level view of what is contained in the business proposal, financial and competition analysis, projection of potential development and a emergency plan.
These objects give the lender with a better sense of how good you understand your small business. It is important that all these regions be outlined thoroughly in your business proposal. You also need to make sure that you provide adequate information.
When a lender understands your business concept, you want them to have a clear picture of the way you will use this small business loan, not only to get working capital to pay them back; however to be a worthwhile and profitable assignment.
To go along with your business proposal , you will need to perform a financial analysis. The financial analysis should detail the budget on the project, financial forecasts, current market trends and equity. Those objects reveal to the lender the viability of your small business.
Lenders need to invest their money into a business so that it will be worthwhile. The more research you present to them about your small business and its capacity profitability, the better your possibilities are at being authorized. In case you are getting into a market that has not been evaluated or is very new, use similar industries to reveal the potential growth.
Over and above your financial analysis, be organized to offer duplicates of your personal credit report and tax returns. Lenders need to know your credit history and how you have dealt with the credit given to you.
To end with, categorize your small business loan repayment plan. You should consider the interest rate and repayment term. Your projection will give the lender an idea of the time-frame in which to be repaid. Include any collateral that you normally plan to use as a source to guarantee repayment. The usage of collateral will help to secure the small business loan and exhibit to the lender that there may be a way for them to get back their money in case you default on loan.
In the end, discuss your exit plan with your lender. A contingency plan is essential to address. It indicates future thinking. While the contingency plan may be based on future forecasts, it still demonstrates that you understand that change is part of business and that you are ready to handle situations that can arise.