How to Make a Portfolio for a Bank Loan
Applying for and receiving a business loan can be a lengthy process, often taking between two and three months. Errors in the loan application, or requests for additional information can slow the process, and may not present your business in a favorable way. By developing a loan portfolio for potential lenders, you will be providing them with the information they need while having an opportunity to share additional information that may make a loan approval more desirable for the bank.
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Instructions
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Complete the bank's business loan application. You will be asked details about the loan and your business, including the form of business ownership that you have. The application will ask you for a brief description of your business, including how it generates, or will generate profits. You will need to show what you intend to do with the loan proceeds. Be certain that every line item is completed and question answered on the application. If the question does not apply, write "N/A" on the line to show that you have reviewed the question and did not ignore it.
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Assemble your last two years of personal and business tax returns, along with all supporting IRS forms. Make sure that you sign the tax forms. Place these all in order by the year and attachment sequence of all of the forms, and put them next in the order of all documents.
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Include a resume for yourself and any other key corporate officers of the business. The bank will want to know the history and qualifications of the key players in the business who are responsible for managing the money and repaying the loan. A resume similar to what you would use for applying for a job will be sufficient.
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Formulate and complete a business plan. If it is a new business, explain in detail how you plan to use the business loan to produce an income and repay the loan. Include realistic projections of all financial outcomes, including future profit and equity. Back these projections up with facts that support this outcome. If you are applying for a loan for an existing business, show how the financials of the business will be improved with the proceeds from this loan. Show in the plan any collateral or security you plan to provide for the loan.
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Attach other pertinent financial documents. This includes a copy of your personal balance sheet, as well as your business balance sheet for an operational business. Attach a copy of an income statement for the last two years. A letter from your accountant outlining that these are realistic representations of your business's performance and strength is helpful. Include a copy of your personal credit report from all three credit reporting agencies, as well as reports for any other senior officers. Also include bank statements for the last two years, and copies of any other legal business documents such as articles of incorporation and any franchise or supplier agreements. If you have any other information supporting the strength of the application, include it in the portfolio.
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Write a cover letter for your portfolio. It should be brief, introducing yourself, and give a brief summary of your business and why you are applying for a loan. This should be the first page of the portfolio. Immediately following, provide pictures of any business operations or properties that you own. Place all of the assembled information in a three-ring binder for easy review.
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Tips & Warnings
Consider using a loan packer to help you with the process. Packers are familiar with individual bank policies, and are skilled at assembling the necessary information for a loan application and presenting it in the most favorable way possible.
Never stretch the truth or lie on a loan application or in any supporting documents. If information is found not to be true, and you willfully mis-stated it, you could be guilty of fraud.
