As your business grows, you may find yourself in need of a small business loan to reach the audience and profit potential you desire. To obtain the financing you need, your lender will likely ask to see a funding request. A small business loan application could ask for an outline that includes a clear summary of your product or services as well as financials, which will show the lender your credibility as a borrower and your level of risk. You may have created a business plan when you first started your business, and should update it as your company grows and your need for capital increases. You can use this to help construct your request for financing, which should include the following five elements.
- A clear summary: Who are you, what do you sell and whom do you serve? Are you incorporated? If so, how? Who are the principal owners and key staff members? Who are your competitors? What have you accomplished thus far in terms of patents, prototypes and locations? Outline your company’s purpose and basic information as clearly and succinctly as possible. You can go into greater depth later in the plan.
- Current financials: Include documentation of your current profits, sales, returns on investment, cash flow and debt-to-income ratio in numbers and charts. Your financing request should also include your balance sheet and a copy of your current assets and liabilities as well as the balance of any small business bank accounts to demonstrate your ability to repay a loan. Your personal finances, like tax returns, could also be considered so be prepared with that information if necessary. Check with your lender to see if there is other financial documentation they require.
- Financial requirements: How will you use the small business loan you are requesting? Are you trying to boost your inventory with working capital, fund your small business marketing plan, expand and obtain a business mortgage, renovate your current space or hire new staff? Make sure your request for financing clearly states the amount you need to borrow and what you are borrowing for. If you are taking out a loan that requires collateral, document what you will be putting up, whether it is your inventory, your building or other assets. Even if this information isn’t requested on a small business loan application, your lender may ask these questions and you should be prepared.
- Growth plan: Where do you see your business in the next year or next five years? What has to happen in order for you to meet your goals? A financing request should include realistic financial projections and data on how your small business loan can help you reach those goals. Will you need to hire new employees or purchase new space or new equipment?
- Small business marketing plan: While the bank may not ask to see this in a small business loan application, it’s wise to have a marketing plan in place to bring in new customers or let existing customers know of exciting new changes. Plus, having a plan in place when you apply for financing may give a lender more confidence in your ability to reach your goals and repay a small business loan.
Obtain a small business loan from a trusted lender
Take a look at the small business plan you created when you started your business and look at your current financials to see how large a small business loan you need to make your desired growth happen. Then, speak to a trusted lender to find out about the different loan products they offer. Compare the rates and benefits of the different small business loan options, and choose one that best aligns with your business plan and submit a request for financing.
Sponsored content was created and provided by RBS Citizens Financial Group.