Write the great American loan proposal
We all could use a little assistance in a recession. For many of you, a loan could help with a new building or renovation, a new equipment purchase, or just a line of credit to help with cash flow. But before the loan comes the loan proposal. You need to wow lenders with a financial presentation that'll knock their socks off. This is a sales job—maybe your first. It's like a job interview, only your job is to convince a potential lender that your practice is a good loan risk and that you'll pay the lender the principal and interest when they're due.
Here's how to write a loan proposal for the money you need right now. These meetings with lenders may be the most important meetings you have for a long time. So be prepared, answer questions, and show off your great plan to pay back your lender in order to get the green light from the people with their hands on the purse strings.
START WITH THE BASICSWriting a loan proposal isn't easy. The last time you shed this much blood, sweat, and tears on an application, you were probably trying to get into veterinary school. Don't worry. The proposal is crucial to getting a loan, but it's just a collection of facts and figures about your clinic's finances and future. If you've studied the viability of your loan, whether it's for a line of credit or a new building project, you're already halfway done. A basic loan proposal includes:
A proposal summary. When you sit down with potential lenders for the first time, don't overwhelm them with a lot of dense verbiage. Your loan proposal's first page needs to hit all the high points: loan amount, length of the loan, preferred interest rate, who's borrowing the money, available collateral, and how the loan will affect cash flow at the practice.
Management profiles. You also need to show your lender who will make success happen. Showcase your previous management experience and medical earning power, along with that of any other owners, as well as any career highlights that will boost earnings. Include résumés for all your key management figures.
A description of the practice. Explain what services your clinic provides to the community. If you're seeking a loan from a small local bank, you may need to explain the finances of veterinary medicine. What specific work do veterinarians at your clinic do, and how much do pet owners pay for it? Walk prospective lenders through your practice's finances and its potential for growth.
Specific information about the loan requested. It's crucial that you know what you want in a loan before you walk into a bank or lender's office. Put that in your proposal summary.
Practice financial statements. Include current financial statements for the past few months, historical financial statements dating back two to three years, and prospective statements as a five-year forecast. Don't show up at the first meeting and ask what documents the lender wants. Be prepared ahead of time.
Your personal financial statements. Lenders want to see your personal financial situation along with that of the other practice owners. They want to verify that those responsible for repaying the loan are in good financial shape. Include information on your assets, retirement accounts, and debts such as your student loan and home mortgage.
Tax returns for the past three years. Banks need to see tax returns for your current business as well as those of the principals involved in this loan.