During these difficult economic times, one constant complaint from CEOs and Owners of small and medium businesses is the difficulty they have in securing debt financing. Businesses that have been successful in securing funding often team with professionals (CFOs) to develop a Bank Proposal Package. A Bank Proposal package is not a business plan, rather a comprehensive turnkey package written so bankers and lenders will take action.
Most small business owners/CEO’s work with their bookkeeper or Controller to compile information they think the Lender would want to see. They then schedule an appointment with their Bank Officer to request a loan. Professionals services firms lead you through a 3 step process: 1) prepare a Bank Loan Proposal Package that “tells the story” to the Banker describing your businesses; 2) presents the financial information the lender requires; 3) presents your business in the best light – an organization that is professional, has done its homework, and can stand behind their numbers. Typically, businesses that present a comprehensive Bank Loan Proposal Package move up in the review priority sequence, as lender’s have less work to do gathering information. The result is that the loan application is promptly sent to loan committee for review and approval faster.
The typical elements of a professionally prepared Bank Proposal Package are:
– Executive Summary
– Business Plan
– Personal Financial Statement
– Recent Credit Report with FICO Score
– Management and Ownership Profile
– Financial projections for the current year
– Most recent 3 years tax returns
– List of all assets including appraisals, copy of purchase orders, acquisition price and current net book value. The lenders typically like to see an estimate of orderly liquidation value (“OLV”) and forced liquidation value of the assets (“FLV”)
– Current aging report for accounts receivable and accounts payable
– Organizational Documents
– Information related to other loans, leases, etc.
– Website – URL link and high resolution color copy of the Home Page and About Us page
– Source and Use of Funds Statement for the proposed loan
– Application from the lender