A well documented and well prepared commercial loan proposal is the first step towards getting the loan a business would need from the bank. A small business loan proposal is going to be the first official contact with a banker would have with the business. The document should be such that it presents the business in the best possible light and the goal would be to persuade the banker, so that he comes to realize that once the loan is sanctioned, the business would be a success and the loan repayment would be a very easy process. MSME financing is easy to find now as there are many banks and NBFCs like Bajaj Finserv that provide adequate financing.
The business plan is the key for small businesses and should form the crux of the proposal. One should not make the proposal in a hurry and should devote maximum time to it. It should cover the following sections:
- Executive summary: This section would provide a compact overview of the business. It should briefly describe the company, the type of industry it is and the competitive advantage it has over its rivals so that its growth is guaranteed. It should also state the amount of money required for the project and how the business intends to utilize that money.
- Description of the company: One should completely describe the history, the current operations and the strategy the business follows in the main part of the business plan.
- Management team experience: In this section, one should show the skills, the total experience and the qualifications of each member of the management team. The banker would need an assurance that the company has the right management team to make the project work for which the money is required.
- Key financial data: This section of the proposal should highlight the financial strength of the business. It is important to provide the financial statements of the past as well as the profits one expects in the next two to three years. The banker would take some time to understand the track record to evaluate whether the numbers would be enough for the loan repayment. Hence, it is very important, to be honest, and transparent in this section as it would determine the MSME loan eligibility.
- Marketing plan: A good marketing plan would provide the perfect answer to the question that whether the business makes the required services and products that would be accepted by the clients. Are they something unique or can they be easily replicated by the competitors? Is the client profile impressive enough and would the marketing plan help in bringing more customers?
- Production plan and Human Resource: The ban would also like to know that what is the total output of the company in terms of production, and whether the company has enough skilled labor to handle that kind of production process
Certain supporting documents should also be included with the proposal which will bolster the proposal further to show that your claims are based on facts.
- They can include market studies or other research that support your conclusions and forecasts.
- Documents that will support financial data like copies of leases, sub contractor estimates and letters of credit.
- Client testimonials and media reports about the company.
It is important to use simple and clear language, without any kind of excessive jargon for the proposal. It should be well structured and should focus on showing how the business would succeed, presenting it in the best possible light. Consider working with professionals who have prepared such proposals before and a seasoned copy writer or editor would be able to help you with the writing skills.