When you apply for a loan, it’s important to get everything right, the first time. Spending too long on your application can damage your business. We can help your chances of success with our guide to what small business loan applications must include.
Preparing your application plays a big part, so setting out the details early (even before you think you need one) will put you in a much stronger position when the time comes to expand or if circumstances require you to raise finance quickly.
If your intended loan is to improve your business as appose to start-up a business, for instance, if you want to extend your restaurant to incorporate more tables, then showing detailed financial projections on exactly how the loan can increase your revenue is key to its success.
Your business plan should be made of a number of sections. Ideally, it will include an executive summary, a comprehensive financial analysis and a detailed look at the management team and operation of your business.
We’ve broken it down into the 10 things your small business loans application will need to include:
1) Content table and summary
Include a table of contents displaying where all the relevant information is to be found. Include the basic components of your business with a brief summary outlining your company, the industry and current performance. Briefly state why you are seeking a business loan and always include your contact information.
2.) How much do you want?
Be specific on how much you want for your business. Don’t be too greedy but likewise, don’t be too cautious either. Demonstrate what you will be using the money for; include the cost of your equipment, labour and length of the project. Be sure to include any of your own financial input into your calculations – the lenders like to see your personal financial commitment alongside their investment.
3.) Prepare your financial records – past, present and future
Knowing your numbers is essential in your application. A well-supported loan application will include scrutiny of all financial figures; cash flow, forecasts, projections, and costs.
4.) Explain your industry
How well do you know your industry? Each sector is different and your specific knowledge, experience and track record need to be demonstrated clearly; include years of working within the industry and other relevant experience and knowledge you possess.
5.) Who is involved?
Your plan needs to describe the stakeholders within the business. This includes your management team and the staff they supervise. Include any outside consultant agencies you are using or plan to use and why each member of your management team is the best person for the role.
6.) Cover various scenarios
Keep in mind that the lender will want to know what will happen to your business in extreme conditions. Your financial projections should reflect whether the company is in a strong position in boom times and when the market is in turmoil as well.
7.) Risk analysis
Having an independent risk analysis of your business will also help the underwriting of a business loan.
8.) Marketing
How will you market your new product or increased services to your customers and what is the expected take-up time? Have you researched the marketplace and how you will encourage customers to use your services? You might also find it useful to include further plans as well. If you get investment for your business now and it succeeds, what next?
9.) What assets can you offer?
Be clear to detail about all your existing assets and holdings. This includes all your property, stock, liabilities and equity. It might help to get an independent market appraisal for your assets to show the net worth of your business.
10.) Personal Finance
Your personal financial information might also be requested from the lender. So ensure you have this included and are able to fully explain, in as much detail as possible, your own personal financial and legal situation.
Whether you are applying for a business loan through a bank or an alternative lender, the process and requirements will remain largely similar. Always ensure you have included all the information needed in order to make a consideration on your loan application. Depending on the depth of the information in your business plan, lenders might also require further financial projections before agreeing to your loan application.
If you’re looking for a small business loan, we can help – perhaps even if you’ve been turned down by banks or other lenders in the past. Request a call back from one of our team members and have a FREE one-to-one no obligation consultation.
