How to Write an SBA Loan Proposal

The Small Business Administration is not a money lender. When you apply for an SBA loan, it is actually a commercial loan made by partners of the SBA and structured in accordance with SBA regulations. Those partners include lenders, micro-lending institutions and community development organizations. The SBA functions to lessen the risk of these loans by guaranteeing that they will be repaid.



For borrowers, the application process can be time consuming. Research the borrowing process and gather supporting documentation as you complete an SBA loan proposal.

Instructions

1. Identify the specific loan that best fits your situation and review the requirements. Identify and directly contact a lender, and inquire about which format is best to follow for your loan proposal. Loan proposals follow several different formats. Also find out if there are any specific instructions that you must follow for this loan.

2. Obtain and completely fill out the proper SBA forms for the loan. Sign and date each form.

   There are several forms that may apply, according to sba.gov. These forms include: Form 4, the business loan application, in which you list the purpose of the loan, amount needed, type of loan requested and a repayment statement; Schedule 4-a, a schedule real property and assets form used for collateral; Form 413, a personal financial statement; Form 912, a statement of personal history; Form 1624, a certification regarding debarment, suspension, ineligibility and voluntary exclusion for lower-tier covered transactions; and Form 1846, a statement regarding lobbying.

3. Write an informative executive summary, also called a statement of purpose. Attach it to the business plan. Include information that addresses the loan request in terms of amount, purpose, duration, repayment plans and available collateral. Provide a brief business description and an account of the positive effects that the loan will have on the company. Include one to several paragraphs outlining the amount of capital already invested by the owners.

4. Provide an all-inclusive, current business plan or portion of a business plan. This document should be well thought out and researched. Include sections that describe the business and your vision; market definition and analysis; description of products and services; and an overview of the business organization and management.

5. Provide complete business financial statements that cover at least the past three years. These financial statements should include a cash flow statement, income statement, balance sheet and personal financial statements. Make sure the statements are accurate and up-to-date.

6. Include any additional information that is requested by the lender. These items may include copies of licenses, letters of reference and partnership agreements.

References

• Small Business Administration: How To Apply