To ensure that a loan proposal is well presented before a loan officer, the proposal must clearly show the amount of money the business needs and how the money will be used, states the Small Business Administration, or SBA. A loan officer also wants to know how the borrower intends to repay the loan.
A loan officer uses a business proposal as evidence of the borrower's level of experience, management ability and marketplace knowledge, the SBA notes. The lender uses a credit report from institutions such as Equifax, Experian or TransUnion to determine whether a business owner is likely to repay the loan. The borrower should check her credit reports for errors and correct any that exist before submitting the loan application to the SBA.
Different lenders require different proposal formats, so it's important to contact each lender about its preference before writing the proposal. Most lenders require a business proposal to start with an executive summary as an introduction. This should be followed by a business profile, a description of management experience, an explanation of the loan request and a repayment plan. Descriptions of the collateral as well as personal statements from all owners of the business are also included, as are financial statements and documentation showing the owners’ investments in the business.
A proposal should project cash flow for at least a year or until the business is expected to be stable.