It is commonly known that requesting a loan bank for business loans means thoroughly preparing your business documentation. Thinking from the banker’s perspective, you will definitely consider the risks implied by a business loan and agree that a complex set of documents is necessary, documents that will provide proof of loan repayment.
Often, business loan applications are rejected for not being very well documented and for not being specific enough. In order to be taken into consideration, such requests should have annexed concrete proof that your business is a good credit risk.
Besides the required statement of your personal financial status (containing data on your assets and debts) you will most certainly need a well constructed business plan. Even if not on the loan required documentation list of some banks, the existence of a business plan will play to your advantage and will be appreciated by all means.
Bankers will look for loan amounts, repayment terms, risk assessment and planning and collateral. All these can be clearly highlighted when writing the business plan (possible exception being the collateral if you decide to put up one of your own possessions, but not necessarily, as it may be constituted by buildings or equipment that are registered as firm’s assets).
Business bank loans plans must have a well prepared financial section. The cash flow analysis must be clearly represented, as it is the first thing that will interest the loaner. It must imply the clear idea that there will be enough cash on hand to permit repayment of the established loan parts. (The cash flow analysis — in which it could be seen what has been going on with the business’ cash up to the reference moment – may be also of interest but can be used only in the case of ongoing firms).
And the need for a business plan will not derive only from the necessity of financial background. In the business plan, after expressing the requested amount you will link it to the plans you have for developing your business, in other words you willspecify what you need that loan for.
Obtaining bank financing is definitively a skill, depending very much on the personal impact of the business owner on the bank officer who will decide upon granting the loan.
The applicant must fulfill certain eligibility personal qualities: a good characterand management expertise. Particularly, the management section of the business plan will reveal the qualification and abilities of the management staff in the specific business field they operate (or planning to). Also, the chapter on marketing should highlight the commitment of the business owner to provide assurance of a successful business operation.
Other documents that might be annexed as useful: past business tax returns (for ongoing business) or a credit rating report — showing the repayments you have done at purchasing things on credit.
Business Bank Loans