Starting a business requires a great deal of initiative, determination and skills. One skill that is invaluable in the business world is planning. To successfully build a company, you must be able to make both short and long-term plans and have the ability to effectively carry out your plans to an exact degree. You should carefully plan out your business’ financial needs. If you are going to apply for a business start-up loan, you will need to be aware of what the bank will be looking for and how to portray your business.
When deciding whether or not to grant you a business start-up loan, banks and other lending institutions will base their decision on a number of different criteria. One of the biggest obstacles you must overcome to acquire a business loan is inexperience. If this is your first business, banks will consider you a high financial risk and will be less-likely to lend you the money you need. One way of convincing them that you are a reliable investment is to have a professional and sound business proposal.
In order to write a good business proposal, you must be prepared to answer questions about your business that you will only be able to answer if you have carefully planned out a business strategy. In your proposal, you will need to state how much money you will need to borrow, exactly what the money will be used to do and when and how you will be able to pay the money back. Banks need to lend money out in order to stay competitive; however, they need to know that the money they loan out will be paid back in full. Here are six important sections to include in your business proposal to help you to secure a business start-up loan.
- The name of your business, the names and social security numbers of the investors in the business, your company’s address and its mission statement.
- The amount of money you will need to be loaned, why the money is needed and an exact description of what it is needed for.
- The particulars concerning your business including the type of business, the number of employees you will hire and any important legal details.
- Background information on each primary investor, including education, experience and professional accomplishments.
- Information about the marketplace your company will enter into, including any competition you might have and a detailed description of your customer.
- Financial information regarding your business such as a projected balance sheet and income assessment as well as a financial background and credit history for each of the primary investors in the business, including collateral and other assets owned by the primary business investors.
Banks will also want to know if you, as the business owner, have enough experience and expertise to found a promising business. It will be helpful if you have a sound credit history and/or have paid off loans in the past. They will also want to know that the business will be generating enough profit to pay the monthly payments the loan will require. If you include all of these things in a concise and accurate business proposal, you will have a better chance of receiving a business start-up loan.
By Stacy Hinojosa