How to Present a Business Loan Proposal

It's been said that you never have a second chance to make a good first impression. And nowhere is that more important than when you present a business loan proposal to a potential lender. But you can increase your chances of getting a startup loan or credit like Thorn finans by following these tips for presenting the loan.

Business loans are the riskiest loans because business is a risky enterprise. Startup loans are even riskier; the Small Business Administration (SBA) says 50% of small businesses fail in the first five years.

But a small business can still increase the odds of success by remembering these factors: 

• The information you provide to the lender
• How you present that information. 

Make an appointment

Lenders, like all of us, are busy people. If you want to impress a lender, call ahead and make an appointment for a specific time. Ask if the company is lending now, and give a very brief one or two-sentence description of your business and why you want money, sometimes referred to as an "elevator pitch."

Talking by phone will save you time if the lender is truly not interested, but remember this is how banks, credit unions, and other commercial lenders make their money. 

Overdress

In a situation where you aren't sure how to dress, it's always better to be overdressedthan underdressed.

If you want your loan proposal to be taken seriously, dress like you are serious.

Understand what a lender is looking for

It's been said that lenders lend money to people who don't need it. In these tough financial times, it's even truer. A lender wants to know only two things: 

• How much do you want?
• How will you be able to pay it back?

The answers to the first question are shown in the business plan and financial spreadsheets you will be presenting. You will need a balance sheet, a proposed income statement (P&L), a break-even analysis, and possibly a sources and uses of funds statement to show where the money will come from and where it will be spent. Larger businesses may use a business requirements document to show how the funds will be used in a big project.

The answers to the second question can be developed as you talk to the lender. Have an understanding of the "4 C's of credit" and what kinds of credit a lender is looking for. 

Be prepared with information

Bring all the information needed for the lender to make a decision. This includes personal information on yourself and any possible co-signers, in addition to a business plan and financial documents. You should bring your personal financial statement.

If you think there may be issues with your credit, check your credit score and get a detailed credit report. If you have assets you want to use as collateral, bring information on those assets. You want to be able to answer the lender's two questions above, as completely as possible. 

Be brief

Remember the two things a lender wants to know (see above). Talking about all the wonderful features of your business and how you found the idea for the business takes time and doesn't answer the questions.

The best way to be brief and complete is to have an executive summary of your business plan available for the lender to read. Include some meaningful graphs or charts to illustrate the financial projections you have prepared. 

You may or may not get an opportunity to talk much, so work on the inverted pyramid method that newspapers use: Start with the most important information, to answer the lender's primary questions. Then, if you have time and the lender appears interested, talk more about your business and what you hope to achieve.