Crafting a Love Letter to Lenders - Tips for a Killer Loan Application

Crafting a Love Letter to Lenders - Tips for a Killer Loan Application

In the grand quest for capital, your loan application isn’t just paperwork… it's your love letter to lenders. It's where finance meets romance, less the candlelight dinner and faux French waiter. So, how do you pen a love letter that gets you to "yes"? In this short article we’re going to give you a couple of tips to write a killer loan application that's bound to make lenders swipe right.

Know Thy Lender

Before you even think about serenading your lender with figures and forecasts, know what makes them tick. Each lender has their own "type" – the ideal borrower profile. Do your homework. Are they into small businesses, startups, or more established ventures? Aligning your application with their preferences is step one in this courtship. We call this a credit box, every lender is trying to find out if you fit in it or not. So you can go to one lender at a time and ask them. Or you can use our marketplace where we have 100’s of lenders and know exactly what they’re looking for. Imagine it like a dating app for business loans and lenders. 

The Love Letter Essentials

• Executive Summary

  • This is like your pickup line. This isn't the place to be shy. Your executive summary should be clear, compelling, and concise. Don’t be cringey here. Be strong enough to pique interest, but humble enough to not be boastful.  

• Business Plan

  • Here's where you open up, it’s time to get real. Your business plan isn't just about numbers; it's the story of your business. What's your mission? Who are you helping? How do you stand out in the sea of suitors? Make your narrative compelling. This is your Heart to Heart. 

• Financial Statements

  • A relationship doesn’t even get serious until you start sharing bank accounts. This is the time to lay your financial cards on the table. Include income statements, cash flow statements, and balance sheets. Show them you're not only trustworthy but also financially savvy. This is where you’re completely transparent. Don’t hide anything, let’s get a good honest look at where you are. 

• Credit Score and History

  • Yes, your past matters. Your credit score and history are like discussing your exes; it's about showing you've grown from past relationships (read: debts). Aim for a score that screams commitment – typically, the higher, the better. For fun, we can call these the “Ex Files”.

• Collateral

  • In the world of lending, love isn't all you need. You also need collateral. It's your way of saying, "I have skin in the game." Detail what you're offering as security for the loan – property, inventory, receivables, or even equipment.

• Projections

  • Share your dreams – but make them realistic. Financial projections should be optimistic yet grounded. Show lenders how you plan to grow together, with clear, achievable goals. I recommend a good better best approach. Instantly every lender is going to assume that you have the rosiest of projections. Make sure to take a good hard look at them yourself and account for things not going 100% to plan. In our business is like dating comparison, we all know it never does. 

• The Ask

  • Ambiguity is the enemy of affection. Be clear about how much you need and what you'll use it for. Itemize your needs and explain how each dollar brings you closer to your shared goals. We should move this to #1. If you don’t know what you need the money for, then why are you asking for it? It’s impossible to know if you should even get a loan if you don’t know how it’s being spent and what your return is.

Personal Touches

• Know Your Story

  • Every business has a story. What's yours? Personal anecdotes, customer testimonials, or significant milestones can turn a sterile application into a compelling narrative. Don’t oversell here, but know it.

• Mind Your Manners

  • Politeness counts. A respectful, professional tone can make all the difference. Thank your potential lenders for considering your application.

• Follow Up

  • Don't just hit "send" and wait. Follow up with a polite email or call. It shows you're genuinely interested and not just playing the field. Your engagement in the process is just as important as any other piece of the application. A lender can only match your enthusiasm and dedication. 

Love at First Sight or a Slow Burn?

Not every lender will fall head over heels immediately. Sometimes, love takes time – and so does a loan approval. Be patient, be persistent, and most importantly, be prepared to show why your business is worth the investment.

Remember, a killer loan application is more than just numbers and documents. It's your opportunity to tell your story, share your vision, and start a lasting relationship with your lender. So make it count, and who knows? You might just find your financing soulmate.

My name is Zac Smith and I am the owner and Funding Coach of LendingWISE, LLC. My mission is to provide access to capital for every Small Business. I do that by providing stop gap funding for immediate needs, help you build your business credit to apply for a long term loan and finally find tax credits that go well beyond your standard deductions. 

Checklist: Crafting a Killer Loan Application

• Understand the Lender’s Credit Box

  • Research lenders’ preferences (small businesses, startups, etc.)

  • Use a marketplace like LendingWISE to find the perfect lender match.

• The Ask: Define Your Financing Needs Clearly

  • Be specific about how much you need and why.

  • Ensure you understand the return on investment for the funds.

• Craft an Engaging Executive Summary

  • Make it clear, compelling, and concise.

  • Avoid being boastful or cringey.

• Develop a Detailed Business Plan

  • Share your business's story, mission, and unique value.

  • Highlight who you are helping and how you stand out.

• Provide Transparent Financial Statements

  • Include income statements, cash flow statements, and balance sheets.

  • Show your business's financial health and savviness.

• Discuss Your Credit Score and History (The Ex Files)

  • Aim for a high credit score to show reliability.

  • Be open about your financial past and growth.

• Detail Your Collateral Offerings

  • Clearly state what you’re offering as security for the loan.

• Share Realistic Financial Projections

  • Use a “good, better, best” approach for projections.

  • Prepare for scenarios where things don’t go as planned.

• Know Your Story

  • Include personal anecdotes, customer testimonials, or milestones.

• Mind Your Manners

  • Maintain a respectful, professional tone throughout the application.

  • Express gratitude to potential lenders for their consideration.

• Follow Up

  • Show your engagement and interest by following up politely.