Introduction

A bank-ready loan proposal is more than a request for money — it’s a lender’s blueprint for how your business will generate the cash to repay a loan. In my 15+ years advising small businesses, proposals that follow a clear structure and include verifiable financials cut underwriting time and improve approval odds (U.S. Small Business Administration, https://www.sba.gov).

What lenders expect (quick overview)

  • A clear loan amount and purpose
  • Historical financials and realistic projections
  • Collateral, personal guarantees, or other credit support
  • Market and management information that reduces perceived risk

Step-by-step: What to include in a bank-ready loan proposal

  1. Executive summary (1 page)
  • One-sentence business description, loan amount, and the specific use of funds. Keep it persuasive and factual.
  1. Loan request and use of funds
  • Exact amount requested, a breakout of costs (equipment, leasehold improvements, working capital), and a timeline for spending.
  1. Business overview
  • Legal structure, ownership, history, locations, number of employees, and the company’s value proposition.
  1. Management and organization
  • Short bios for owners and key managers highlighting relevant experience and roles.
  1. Market analysis
  • Target customers, competitive landscape, pricing strategy, and key sales channels. Lenders want to see you understand demand and competition.
  1. Financial history (last 2–3 years)
  • Clean, reconciled profit & loss statements, balance sheets, and cash-flow statements. If available, include business tax returns. (Consumer Financial Protection Bureau, https://www.consumerfinance.gov)
  1. Financial projections (typically 3 years)
  • Monthly to quarterly cash-flow for the first 12 months and annual forecasts for years 2–3. Include assumptions and break-even analysis. Keep forecasts realistic and defensible.
  1. Collateral and guarantees
  • List assets being offered as collateral (equipment, real estate, receivables) and any personal guarantees. Be transparent about liens.
  1. Repayment plan
  • Show how projected cash flow funds principal and interest payments. Use an amortization schedule or payment table.
  1. Supporting documents (append as appendix)
  • Business and personal tax returns, bank statements, resumes, leases, supplier contracts, customer contracts, insurance certificates, business licenses, and any pertinent legal documents. For a checklist of typical commercial loan paperwork, see this resource: Preparing Documentation for a Commercial Loan Application.

Formatting and presentation tips

  • Keep the main proposal 8–20 pages; place voluminous supporting evidence in an appendix. Lenders prefer concise narratives with clear evidence.
  • Use headings, numbered lists, and a table of contents for quick navigation.
  • Label exhibits (Exhibit A: Historical P&L; Exhibit B: Equipment invoices) and reference them in the text.
  • Convert to PDF to preserve layout and prevent accidental edits.

Common mistakes to avoid

  • Vague or unsupported revenue assumptions. Always show the math behind projections.
  • Missing reconciliations between tax returns and internal financials.
  • Overly long proposals with no executive summary—busy lenders may stop reading.

Real-world example (brief)

A café client asked for $75,000 to open a second location. We built a two-page executive summary, 3-year projections with unit-level sales assumptions, vendor quotes for equipment, and a lease agreement. The lender approved a $60,000 term loan with a line of credit after seeing the clear use of funds and realistic cash-flow model.

If your application receives a conditional approval

Follow the lender’s conditions quickly and transparently. Typical items include updated bank statements, signed guarantees, or evidence of insurance. For guidance on handling conditions and next steps, see: Steps to Take After Receiving a Conditional Loan Approval.

Practical tips from practice

  • Start building your proposal before you need the loan. Clean financials and documentation take time.
  • Get a second set of eyes—an accountant or lender-savvy advisor can catch inconsistencies.
  • Tailor the proposal to the lender (community banks may focus more on local market knowledge; SBA lenders will expect SBA-specific forms and stronger collateral explanations).

Where to learn lender expectations and templates

FAQ (short)

Q: How long should a proposal be?
A: 8–20 pages for the main proposal, with supporting docs in an appendix.

Q: Is collateral required?
A: Not always; but collateral or guarantees strengthen the application and may lower rates.

Q: Should projections be optimistic?
A: Be realistic and document assumptions — lenders penalize unsupported optimism.

Professional disclaimer

This article is educational and does not constitute personalized financial advice. Consult a qualified lender, accountant, or financial advisor when preparing a loan proposal.

Sources and further reading

Next steps

Gather your financials, draft an executive summary, and build the appendix of supporting documents. When you’re ready, discuss the draft with a lender or financial advisor to tighten assumptions and improve approval odds.