Writing a Small Business Loan Proposal
A Home Business Article Contributed by Marsha Maung
Writing a Small Business Loan Proposal
You've got your small business plan all worked out, now it's the time to write a loan proposal. The proposal you're going to send to your Bank Manager so that you can get a loan to kickstart your home business.
Writing a small business loan is not as hard as people initially think it can be. It's truly easy. But it takes time, a lot of research and maybe a good relationship with the Bank Manager would help. But if you're not chummy with the loan offer, that doesn't mean that your plan for your small business is shot.
The Small Business Loan Proposal Should Have Meat
Do your research on your business and the market before you submit your proposal. Bank Officers would not take a second look at your proposal if it's only 2 - 3 pages long. You need more than that. Details, facts, statistics, research, demographics, projections, marketing plans, product explanation...and just about everything.
They need to know all that in order for them to approve your loan because they want to know you'll make money from your small business. In fact, last I heard, the Bank is more eager than ever to give you a loan but you need to convince them that you're serious about your business and you're out to make money and you'll pay them back.
The Small Business Loan Proposal Should Have a Marketing Plan
A good, innovative product and a marketing plan is of interest to the bank. But even if you're selling something everyone else is selling, they want to know your marketing plan, your plan for expansion, your profit and loss projection. You have to write a realistic plan on this one.
Do a thorough research on your competitors and the methods that they are employing to market their products. You should also find innovative ways to promote your own small business. The loan officer wants to know that you're not just going to make money, they also want to know that you're going to make money fast.
Name the types of marketing avenues that you're going to use to promote your small business. For instance, ads, radio campaigns, contests, tie-ups, affiliation with other businesses, road shows, exhibitions...etc. The marketing plan, of course, have to be both realistic and down-to-earth. Tell the loan officer that you're going to spend millions on a worldwide marketing campaign within the first three months is just going to blow the whole proposal out of proportion. And the likelihood of them accepting your application is...well, slim.
Small Business Loan Proposal with a Practical Cash Flow Projection
Anyone can write a simple cash flow projection - it's not really as hard as it sounds. What a cash flow projection is is a forecast of when money is coming in and when money is coming in at certain months. You're projecting expenditure and revenues based on your marketing plan - and that's what you should do. Make references to your marketing plan so that your cash flow projection and marketing plan don't clash.
And of course, don't forget to include a short plan for remedies for short fall in cash. This means that you should have a Plan B in case there's an emergency. To a loan officer, if there's cash backup on your part, like a house mortgage option, then they should be assured that when there's an emergency, you'd be able to settle at least the interest portion of the loan.
