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When you apply for a business
loan, your request must meet certain basic requirements.
Your banker needs
to have:
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A
written request for a specific amount of money. |
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A
detailed explanation of the use of the funds. |
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A
projection of how and when you will repay the loan. |
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A
list of the collateral you are offering as security for the loan. |
In addition to these essentials,
the banker will want to know what will happen in the event of
your disability or death; that is, do you carry disability, life,
and general liability insurance?
The banker also wants to know:
1. The financial history of your company in the form of company balance sheets and profit and loss statements for at least the past three years.
2. A realistic projection of profits and a twelve-month (month-by-month) cash flow projection. This spreadsheet should show the specific month that cash will be received from various sources and the month that specific disbursements need to be made.
3. A narrative relating your personal business experience.
4. The company "game plan" telling where the company will be several years hence in terms of size, types of products or services, number of employees, locations, etc., to give the banker some insight into your long-range planning.
Put yourself in the banker's shoes and see what questions you'd want answered if someone asked you to risk your capital. If you have not previously assembled a loan request in this manner, engage professional assistance.
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If we can assist you in
assembling a loan request or in your other business concerns, please
call our office, or send your questions to us via e-mail. |
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