Atlantic Union Bank has extensive experience evaluating existing companies to determine if they would be good candidates for commercial and business loans. Most importantly, we’re here to help organizations of all sizes succeed. Here’s a basic primer for you and your business as you begin the loan process.
Evaluate your business
Good candidates for business loans:
Regardless of your company's history, the goal when seeking a loan is to present the best possible business case in the form of a loan proposal. A well-designed, well-written proposal shows lenders that your business is a sound investment that generates solid, stable returns.
- Generate sufficient cash flow to cover loan payments;
- Have a solid credit history with a long-term track record of meeting financial obligations;
- May have financial reserves to weather unexpected downturns or setbacks;
- Have collateral (business or personal assets) to put up for security
Prepare a proposal
When preparing a loan proposal, gather information to answer the following questions:
These are key questions lenders ask. Make sure you’re prepared to answer those questions before writing the proposal.
- How much money does your company need?
- How will your company use the loan?
- How will the business repay the loan?
- Why is your company a reliable candidate for a loan?
- What will your company do if it's unable to repay the loan?
When you're done collating the facts and figures, include the following key elements in your loan proposal:
- Business Profile. Describe the history of the business, current activity, and results. Include an overview of your market, your customers, and your industry.
- Loan Amount. How much money do you need? Focus on the methods used to determine the loan amount. Include quotes for equipment, supplies, building costs, R&D expenses and so on.
- Loan Purpose. In detail, describe how you'll use the borrowed funds. Include written documentation, cost estimates, expansion proposals, and other relevant information in this section.
- Loan Repayment Plan. Describe the terms you hope to receive (interest rate, length of term, etc.). Show how you can make repayment based on sales and cash flow projections.
- Collateral. What happens if you can't pay back the loan? If you plan to purchase a building, facilities, or equipment, those items are collateral.
- Financial Statements. Provide financial statements, including complete business tax returns and financial statements for the past three years, along with personal financial statements and tax returns for all owners. Be prepared to provide other financial documentation such as financial projections, sources of equity for your loan, and other supporting information.
Commercial lenders want to understand your business so they can lend to you with confidence. A well-developed loan proposal improves your chances for loan approval. Don’t be discouraged if any of the above seems confusing or you don’t think your business will qualify for a loan.
Remember: No matter the size of your business or balance sheet, we’re here to provide guidance and support. To learn more about the loan process, connect with an Atlantic Union Bank Relationship Manager.