Putting Together the Perfect Loan Proposal

Asking for money is never an easy task. To be successful and achieve the funds needed for a small business, approaching lenders with a stellar loan proposal is paramount. Proposing a loan is an act of self-promotion that serves to sway lenders into relinquishing funds from their bank account to that of the requesting business’ by instilling a strong sense of surety that the money will be repaid.


Loan proposals are documents that accompany a loan application. They can be thought of as cover letters for loan requests. In these documents, it is necessary to portray the requesting business in the best light possible. This is accomplished by outlining the background and proficiencies of the owners and operators of the business, how much money the business is requesting and how the money will be used, and how the loan will be repaid.


The owners need to come across as knowledgeable and savvy regarding the running of their business as well as in their understanding of the market in which they operate. Lenders want to feel comfortable that the money they are providing will be managed properly and responsibly. The proposal needs to concisely state the qualifications of the owners to operate their business successfully and to provide a profitable enterprise capable of repayment.


The loan amount is crucial to include in the loan proposal. Without this explicitly stated, the ambiguity of the document regarding the requested amount of money may sway lenders to deny the loan. Also, this perceived lack of attention to detail can cast the requesting party in a poor light and speak to their ability, or lack thereof, to repay the loan.


Perhaps the most important aspect of the loan proposal is the section outlining how the loan will be repaid. This section is part business plan, part market forecast, and part sales pitch. To succinctly forecast future business plans in a way that takes into account market fluctuations, consumer whims, and potential pitfalls is no easy feat. Projected income and costs associated with doing business need to be included in this section of the proposal, interest on the loan needs to also be considered, and an incremental plan of continual repayment outlined.


Proposing a loan for a small business is a feat of writing and business acumen not for the faint of heart. It can be a daunting notion to ask for thousands of dollars from a stranger behind the desk of a large bank, but also a rewarding one. If approved because of a concise, informative, and expertly planned loan request document, one can relish in the fact that they wrote their way to potential business success and an immediate monetary infusion into their company.