How to Apply for a Small Business Loan

Applications for small business loans require written loan proposals. The proposal should begin with a cover letter or executive summary, which answer the following questions:

• Who are you?
• What is your business background?
• What is the nature of your business?
• What is the purpose of your loan request?
• What is the amount of your loan request?
• What are your requested terms of repayment?
• How will the loan funds benefit your business?
• How will you repay the loan?

Avoid flowery, complicated language at this stage. Save that for later. Be simple and direct at this point. Get the basic information across. Otherwise, no one will bother reading the rest of your application.

Now, begin writing your proposal. Many different proposal formats are possible; check with your commercial lender as to which format will work best for you. Then, begin writing.

When writing your proposal, follow these tips:

• Include industry-specific information, such as trends affecting it. Commercial lenders deal with all kinds of loans for all kinds of situations. Don’t assume they know anything at all about your particular industry. Be sure they understand how your business is run.
• Include a written description of your business, complete with the following details:
  • Type of organization
  • Date of information
  • Location
  • Product or service
  • Brief history
  • Proposed Future Operation
  • Competition
  • Customers
  • Suppliers
    • Keep the competition in mind. Others will want the same loans you want, so highlight what makes your business special.