Released on: March 21, 2008, 4:33 am

Press Release Author: annaya rana

Industry: Management

Press Release Summary: The process of applying for a business loan is a stringent
one as compared to the standard procedures in obtaining a home mortgage loan or a
personal loan.

Press Release Body: The process of applying for a business loan is a stringent one
as compared to the standard procedures in obtaining a home mortgage loan or a
personal loan. This is probably due to the fact that business loans contain a
greater risk element as compared to other loans. Therefore, lenders need to exercise
greater caution and emphasis when evaluating business loan applications in order to
minimize their risk exposure.

With that, lenders evaluate their applicants based on the information that are
provided as well as their judgment of the viability and profitability of the
business being financed. Thus, business loan applicants will be required to submit a
loan proposal along with their applications with the purpose of creating a positive
impression upon the lender.

The first element of a loan proposal is an executive summary, providing short
descriptions of the type of business and the industry, the purpose and usage of the
loan, the proposed repayment conditions as well as the intended loan period. After
that, the company information is provided, enriching the reader with the nature of
the business, the location of the business, company history, the products or
services provided, key differentiation factors of the company or the product, the
general growth of the industry, competitive information, growth potential and target
customers.

It would help if you could include your company marketing strategy, detailed product
information, historical information as well as projected growth plans for the
company. Apart from that, if you plan to incorporate product or service extensions
in the future, you should provide these descriptions within your loan proposal. If
possible, geographical expansion plans will help in the proposal.

The next area that needs to be showcased in the proposal would be the credentials
and experience of each member of the management team. Impressive credentials will
provide assurance to the lender that the company is managed by individuals who are
responsible and capable. This is important as having the wrong people managing the
company could be detrimental for the business.

In any loan application, historical records are essential to be used in evaluating
the performance of a company. As new companies do not yet have these records, the
financial records of the owners will be used as the basis of evaluation. Income tax
returns forms are also required by lenders. All of these records provided should be
the latest copies less than 90 days old, with the exception of the income tax
returns form.

If the loan is applied for an existing company in active operations, company
financial statements, including profit and loss accounts, balance sheets and the net
worth reconciliation record should be included in the loan proposal. Again, all of
this information should also be the latest and less than 90 days old. Additionally,
a listing of accounts receivables and other short term and long term debt should be
attached.

On the other hand, if the loan application is submitted for a new business, a
pro-forma balance sheet and profit and loss account should be provided. Apart from
that, a cash flow projection for the upcoming year is drafted to indicate the
possibility of recovering the debt. This also means that projected revenue, profits,
costs incurred and expenditure should be listed out with definite explanations
provided as well as a list of assumptions.

If you possess assets that you wish to use as collateral for your loan, details for
this should be provided to the lender as well. It is often common for lenders to
request for dual sources of repayment in the event that one source is defaulted.
This means that if the business owner defaults on his repayments, the collateral can
be sold in order to recover debt.

Finally, other documents normally required for a loan application would be items
like the article of incorporation, lease agreements, partnership agreements,
license, references, etc. As the list of required documentation, information and
attachments differs between lenders, it is best to check with the individual lender
on their specific information and documents required to be attached with the loan
proposal.


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Contact Details: nanak1034@gmail.com

sco-90, sec-35/C, chd