What to Include in Small Business Loan Application in Grand Rapids?

Applying for a small business loan Grand Rapids can be an overwhelming process. However, it's vital for the individual applying to know exactly what the lender is looking for. The loan application must be viewed as a sales tool, such as an advertisement or brochure. The following information briefly explains the essentials of what to include in a small business loan application.

Cover Sheet, Cover Letter, and Table of Contents

The cover sheet is essentially the title page of the application. It should state the date, business name, business address, and telephone number. The cover letter is a personal business letter to the banking asking for consideration of the application. In the second paragraph of the cover letter, it should explain the line of business. The third paragraph should provide insight on the future direction of the business. The table of contents should include all of the documents in the packet.

The Amount and Loan's Use

This page of the document lets the lender know the amount that needs to be borrowed and how the money will be used. If the business owner is looking to purchase a new printer, it should show the contract price with installation and freight. It should also include a computation of the amount the business owner will be personally contributing, which will leave the amount that needs to be borrowed.

Business History

In this section, it's important for the business owner to give more details about the business. This should pick up where the cover letter leaves off and describe the legal form of the business. It should also explain why the business will succeed, and finish with a paragraph outlining the future direction.

Management

It's vital for lenders to know and understand the management team. This should also include any outside consultants that have regular interaction with the business. The business owner should list each person's name, background, and their responsibilities.

Market Analysis

The market analysis should explain the direction of the market and how the brand's product line or services plays in the market. This section should also include any future plans to introduce new services and products.

Financial History and Projections

Any business application must include balance sheets, profit/loss statements, and any other financial documents. These documents will be used to compare against other industry norms. To satisfy the financial projection section of the application, business owners must present an income statement, cash-flow statement, and balance sheet. Most of these documents are prepared by an accountant.

Collateral

It's important to list all collateral so the banker will understand there are backup repayment sources. Examples of collateral are bonds, stocks, cash reserves, home equity, equipment, and receivables.

Additional Documents

In addition to the previously mentioned documents, most banks will also require a personal financial statement, which includes the individual's net worth.