In order to get a business loan or apply for funding for an investment you should follow these steps in order to maximize the chances of a positive outcome.
The following process applies to loan applications in general and it should be adjusted to the business and the businessman's needs.
We should take the following steps:
Choose a bank you are already collaborating with
This will give an advantage during the evaluation of your credit standing and solvency.
Ask for support letters from previous associates with whom you may collaborate for your new business project.
Prepare a short description of the business and the businessman
It is common banking practice to prepare a short presentation of one’s company and business activities (name, owner, address, telephone, e-mail) or, if it is one’s first business project, to include a CV (education, professional experience, skills, profile, family activities, etc.) and contact information and attach it to the loan application.
Prepare detailed information for the bank
Banks need assurances regarding loan payment method and the application should include:
- The amount of the loan
- The intended use of the money
- What you will achieve - How is it going to make your business stronger
- Requested terms and years of payment
- What asset are you offering as a guarantee and a list of existing mortgages on the asset as well as liabilities regarding other bank loans?
Prepare a Business Plan
A business plan must include the financial plan i.e. the budget and cash flow. It comprises the following:
- anticipated profit and loss on a 12 month basis,
- anticipated profit and loss on a 5 year basis,
- anticipated cash flow.
Fully substantiate your business plan
Prepare a Business Plan in which you describe in detail assumptions and necessity of the loan for the implementation thereof or the investment's goal.
A FULL BUSINESS PLAN MUST INCLUDE
- General information on the business
- The owners
- Your personal contribution to the company based on your previous experience.
- The company's legal form
- Your company's advantages
- Product presentation (describe products or services in detail)
- Pricing policy (prices, fees, rent) for the products or services.
- Clients and competitors
- Promotion and distribution cost
- Description of facilities, equipment, licenses, human resources, suppliers and direct associates or executives in the management team (Accountant, Counselor, Lawyer, etc.)
- Break-even calculation.