CHASE - CREDITCARDS

Developing Your Financing Proposal

You have a great idea for your new business venture and you are willing to work hard to make it a success. However, it will take more than those resources to get your idea off the ground. You will need money.  If you do not have sufficient funds yourself, you will need to borrow. Your financing proposal will demonstrate to the prospective lender that you know what you are doing. You can modify your business plan slightly to become your financing proposal.  Here is what lenders look for when you approach them to finance your start-up:

• Probability of Success—You must convince the lender that your new business will be successful. Use this opportunity to sell yourself.
• Personal Credit—Since your business is new, the bank will look closely at how you have repaid personal debts. Get a copy of your credit report and correct any problems before meeting with the lender.
• Personal Investment—The bank wants to know that you are confident enough in your business plan that you are willing to invest in the business with your own money, in addition to borrowing some funds.
• Collateral—The bank needs you to secure your loan with an asset. You can provide information on what you intend to use for collateral in your balance sheet. Show your assets, liabilities, and owner’s equity.
• Repayment—Show how you intend to repay the loan with a monthly cash flow projection. Include details about the assumptions you used to make your projections.
• Business Plan—This document helps the banker understand your vision for your new business. It demonstrates that you are a professional and are serious about your success. It also helps you focus your ideas and strategies, and measure their effectiveness later.
• Experience—You must demonstrate that you have the experience and expertise to succeed in your industry. Include a Professional Resume or Bio detailing your relevant experience.

When you project your business cash flows, you will identify the periods with the largest negative cash flows. These shortfalls indicate how much money you need to borrow and when you will need it. Make sure to request adequate financing up front.

Explain the purpose of the loan, how you will repay it, and why the loan makes good business sense.

REMEMBER: A sound business plan is your key to a successful business—and to obtaining the financing and business credit that you need!

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