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How to Prepare a Business Loan Proposal for a Lender

By Jean Murray, About.com Guide

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You are ready to start your business, and you need money for the start-up and working capital. Or, you have an existing business and you need money for expansion or relocation. In any case, there are some essential documents you need to prepare and take with you when you talk to the lender. Being completely prepared, and having all the information before it is asked for can have a huge positive impact on your ability to get that loan.

1. Understand What Lenders Want

Before you start talking to a lender, you should understand the information business lenders want to see and the criteria by which they judge business loan requests. If you can show a lender you can meet the "3 C's" of business financing, you have a great chance of getting a business loan.

2. Know What SBA Loan Programs You May Qualify For

Before you talk to a lender, review this list of SBA loan programs to see which you might qualify for. Recovery Act loans are available through 2010, or until funding runs out; don't hesitate to ask the bank if it participates in these programs.

3. Prepare Personal Financial Documents

Yes, you will need to bring personal financial documents when you apply for a business loan, even if the loan is for an existing business. Be prepared with these three important documents: a personal financial statement, a personal credit report, and a personal budget.

4. Bring Business Documents (for Existing Businesses)

If you have an existing business, you need to provide this information about your financial history, your business credit, and your tax status.

5. Prepare a Comprehensive Business Plan

Whether your loan request is for a business start-up or an existing business, you will need to show your potential lenders a detailed business plan supporting the need for your request and the resulting increases in your business income.

6. Expect to Be Asked for a Personal Guarantee

Unless you have established business credit and you have collateral from your business to pledge toward the loan, you will most likely be asked to provide a personal guarantee for your business loan. A personal guarantee may be secured by personal equity (your home, for example), or unsecured.