How to Draft a Bank Loan Proposal


Becoming an entrepreneur is a rewarding way to see an idea evolve into life's work. Beginning a business all starts with seed capital--the amount of money that your business requires to launch, stay afloat and make ends meet until you can begin becoming profitable. The way to obtain that capital is generally through a bank loan.

Things You'll Need

  • Social Security Numbers
  • Facts and Figures of Business

How to Draft a Bank Loan Proposal

Collect all information you have on your proposed business: projected revenues and expenses, employees, venues, costs of supplies, marketing materials and niche markets. Determine how much money you'll need to launch the business and remain afloat (a good rule of thumb is to have enough capital to survive 2-3 years without even breaking even). Having an extra cushion will help to continue development as your business is in its infancy.

Write a cover letter. This is the first portion of the proposal the bank will look at, and therefore should be attention-grabbing. The letter should include the proposed name of your company, its location, how much money you are seeking and for what purpose. Be specific in the cover letter about your business and your intentions, but also be clear and concise with your wording.

Complete the remainder of the proposal. There is some flexibility here, but what must be included is: personal information of those involved, data you've collected on the prevalence of similar industries, expected trends in your business cycle, and proposed growth figures. You'll also need to outline here the specific ownership and legal arrangements of your company. Include who the principals will be, the management, what patents are approved and pending and how your business complies with state and federal guidelines.

Provide a complete analysis of financial reports. You should not come to a bank with no money, hoping to secure a loan to carry the entire investment. Instead, break down your investment, what you've contributed, how this affects your balance sheets, and what other sources of funding you intend to seek or already have acquired.

Make a case for the management team. Provide academic and business accomplishments of all the principals, yourself included. Be specific about previous business experience and success as the bank will want to ensure they are loaning to a viable entrepreneur with a solid foundation, not just a good idea. Submit your proposal to all sources from whom you seek funding.

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