A well-crafted business loan proposal is essential for securing funding from banks, credit unions, or online lenders. Lenders want to see a clear plan demonstrating how your business will use the funds and repay the loan.

This guide will show you how to write a strong business loan proposal, what elements to include, and provide a sample template to help you get started.

What is a Business Loan Proposal?

A business loan proposal is a formal document that outlines key details about your business, including financials, the amount you’re requesting, how you plan to use the funds, and your repayment plan.

A strong proposal increases your chances of loan approval and helps secure better loan terms.

Key Components of a Business Loan Proposal

Cover Letter

A cover letter should briefly introduce your business and loan request. It should be professional, concise, and to the point.

For example:

“Dear [Lender’s Name], we are seeking a loan of $100,000 to expand our retail business. With a five-year history of consistent revenue growth, we are confident in our ability to repay the loan while driving business expansion.”

Executive Summary

The executive summary is a one-page overview of your loan request. It should highlight your business, the purpose of the loan, and your repayment plan.

Include details such as your business name, industry, and history, the loan amount and intended use, and how the loan will improve business revenue and profitability.

Business Description & Background

This section should cover the company’s history, including when and why it was started, its business model, and the market opportunity.

For example:

“XYZ Bakery was founded in 2018 and has grown into a profitable café with $500,000 in annual revenue. Our loyal customer base and expanding online orders have created a need for additional equipment and staffing, which this loan will help fund.”

Loan Request & Purpose

Clearly outline the loan amount requested, the specific use of funds, and the expected impact on business growth.

For example:

“We are requesting a $100,000 loan to purchase new baking equipment, which will allow us to increase production by 40%. This expansion is expected to boost monthly revenue by 25%, ensuring timely repayment of the loan.”

Being clear and specific about how the funds will be used will strengthen your proposal.

Business Financials & Projections

Provide current financial statements, revenue and profit growth trends, and projected revenue after using the loan.

For example:

Year	Revenue	Expenses	Net Profit
2023	$500,000	$350,000	$150,000
2024 (Post-Loan)	$700,000	$450,000	$250,000

Including financial projections for one to three years will help lenders understand how the loan will impact revenue.

Loan Repayment Plan

Clearly outline your proposed repayment schedule, revenue sources that will cover payments, and your cash flow statement to demonstrate repayment ability.

For example:

“The $100,000 loan will be repaid over five years with a fixed monthly payment of $2,100. Our current monthly net income of $12,500 ensures repayment feasibility.”

Lenders want proof that you can repay the loan, so be as specific as possible.

Collateral (If Required)

List any assets such as real estate, equipment, or inventory offered as collateral. This helps reduce lender risk and can secure better interest rates.

For example:

“As collateral, we offer business equipment valued at $50,000 and accounts receivable worth $30,000.”

If you are applying for an unsecured loan, explain why collateral is unnecessary.

Supporting Documents

Ensure your proposal includes all necessary supporting documents, such as a business plan, financial statements for the last two years, tax returns, bank statements, and legal documents (business registration, licenses, etc.).

Well-organized financial documents can speed up approval times.

Business Loan Proposal Sample Template

[Your Business Name]
[Business Address]
[Your Contact Information]
[Date]

[Lender’s Name]
[Bank or Lending Institution]
[Lender’s Address]

Subject: Business Loan Proposal for [Loan Amount]

Cover Letter

Dear [Lender’s Name],

I am writing to formally request a business loan of $[Amount] for [Your Business Name]. Our business has experienced steady growth, and this funding will allow us to expand our operations by [Purpose of Loan].

We have a strong track record of financial success and are confident in our ability to repay the loan on time. Attached is a detailed proposal outlining our business financials, loan purpose, and repayment plan.

We appreciate your consideration and look forward to working with you.

Sincerely,
[Your Name]
[Your Business Title]

Executive Summary

[Brief overview of your business, loan purpose, and expected impact on revenue.]

Business Description & Background

Business Name: [Your Business Name]
Industry: [Industry]
Founded: [Year]
Business Model: [Describe how your business makes money]

Loan Request & Purpose

Loan Amount: $[Amount]
Purpose: [Detailed description of how funds will be used]
Expected Business Growth: [Revenue projections after loan is used]

Business Financials & Projections

Annual Revenue: $[Revenue]
Net Profit: $[Profit]
Projected Growth: $[Expected Revenue After Loan]

Loan Repayment Plan

Loan Term: [Number of Years]
Monthly Payment: $[Amount]
Revenue Source for Repayment: [List of revenue streams]

Collateral (If Applicable)

[List business assets offered as collateral.]

Supporting Documents (Attached)

Business Plan
Financial Statements
Tax Returns
Bank Statements

Final Tips for Writing a Strong Loan Proposal

Be concise and professional, avoiding unnecessary details. Show how the loan will increase revenue, as lenders want proof of return on investment. Use realistic financial projections, as overly optimistic numbers may raise red flags. Review and proofread before submitting to ensure clarity and accuracy.

A well-written proposal improves approval chances and helps secure better loan terms.

Conclusion

A business loan proposal is your chance to convince lenders that your business is a strong investment. By following this guide and using the provided sample template, you can create a professional, persuasive proposal that increases your approval odds.