Zenith Finance Blog

Eye Catching

How to write an eye-catching loan proposal to get equipment finance from a bank

Approaching banks for a loan is a scary prospect for many small and medium sized business owners.

As professional equipment finance brokers, it’s our job to look after much of the contact and negotiating with banks on behalf of our clients.

One seductive weapon we use to get so many business equipment loans approved is a loan proposal. It’s a document that makes it easy for banks to see the client is running a viable business – and that offering them a business loan is a low risk.

The draft information is put together by the client. We then take all that rough data and turn it into a comprehensive, bank-friendly, eye-catching document.

Below are the steps to creating an appealing loan proposal that can greatly increase the likelihood of your business equipment loan being approved:

1. Tools and resources

It’s vital that all the information in your loan proposal is accurate. You should always record facts and figures using the right tools, and gather information for your document from the most reliable and knowledgeable sources. So, you’ll want to get hold of:

  • your financial statements
  • relevant documents from your accountant
  • information on existing and past business loans
  • accounting software such as MYOB.

2. The business proposal basics

Start your proposal with general information, including the name of your business and the principals, the address, purpose of the loan, the amount of money you need and how you will use the money for the equipment.

3. Details, details

The aim is to give the banks a good insight into your company. This includes the past 3 years of operations (if applicable) and future performance. Is there anything unique about the business? What’s the legal and ownership structure?

If you’re starting your business, include:

  • projected balance sheets and income statements
  • personal financial statements from all the owners
  • details on any collateral you are using as security for your equipment loan.

4. SWAT analysis

Provide a very clear picture of your strengths, weaknesses, opportunities and threats. How do you rate against the competition? Who are your customers?

5. Bios and profiles

Put together biographies on the owners and other key staff. Focus on their accomplishments, qualifications and education.

6. Be realistic and truthful

It’s not hard for banks to check the information in your proposal. So don’t exaggerate your projected profits, and ‘fess up about any major problems your business might be experiencing, or might have experienced in the past. It’s amazing how often little white fibs or ‘oversights’ come back to haunt people looking for finance.

7. Fine toothcomb

Spelling mistakes and bad grammar can make you look unprofessional. Proofread your proposal, making sure to check your spelling, language and facts.

8. Second (and third) opinions

Your solicitor and accountant should both have a read of your loan proposal before it’s submitted. It doesn’t hurt to have someone objective read the proposal while playing the role of bank manager. They can keep an eye out for weak spots in your document.

9. Include a cover note

You should include a cover note with your loan proposal – a brief introduction to your business, how much you want to borrow for your equipment and why you want the loan.

While details are important, remember that you’re not expected to write the fourth Lord of the Rings instalment. Banks are busy looking at a lot of applications.

By including the really-need-to-know information and leaving out the waffle you’ll come across as professional, honest and very hard to ignore – making it that much easier for the bank to say “Yes!”

As I said, we help all our clients put together their business equipment and property loan applications. So please contact us if you’d like to know more about how we can help you apply for finance.