What an exciting time! You’ve made the plunge to promote yourself from “employee” to “entrepreneur.” The first step has been taken… now what? You know your startup will need funding, but the idea of preparing a loan proposal or business plan is even more frightening than step one. Sit back, relax, and let us help you through it.
What is your business experience?
This is your chance to make a stunning first impression. In this cover letter, clearly and briefly describe who you are, your past business experience, what the nature of your business is, and how the loan will be used. Then, describe the history and activity of your business in addition to your management team’s qualifications. These points prove to lenders that your business not only has strong leadership, but that said leadership also has the experience and understanding needed to nurture a business into success.
How much money do you need and why?
Money might be a “taboo” topic of discussion around the dinner table, but now’s not the time to be shy. In this section, state the amount of money your company needs, and how you calculated this amount. Follow that up with a clear and specific account of what the loan will be used to fund and why it is needed.
How will you repay this loan?
Although loan terms will be negotiated with your lender, this is your chance to tell him or her exactly what you want. Use this section to describe the interest rate and terms you hope to receive, and to clearly lay out how your cash flow will help you meet each repayment schedule. This leads us to the second form of repayment that is important to be addressed.
What if you’re unable to repay the loan?
While it’s not fun to think of your business dream taking a slower start than anticipated, it’s important to be prepared. Here, you will state and describe the collateral you’re willing to pledge in case your business can’t generate sufficient repayment.
How are your personal and business’ finances?
In this last section, it’s time to seal the deal. Here, you will make sure that any owner with 20% or more interest in the business has submit their (less than 90 day old) financial statements. Then, if you’re a growing business, your complete financial statement, including balance sheet, income statement, net worth and interim financial statement, for the last 3 years will be included. If you’re a new business, this is where you will illustrate your projected balance sheet and income statement.
At Arkansas Capital, we understand that starting and scaling your business can be frightening. That’s why we’re here, with our sixty years of expertise, to support you every step of the way.