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Business Funding
Learn about business financing options.

What Banks Look for When Reviewing a

Loan Application
80 comments
Not all banks are created equal, but many of them focus on the same areas throughout the loan review process. Learn what documentation,
projections and narratives you'll need to prepare as well as tips to ensure you negotiate the best loan package available.
By Mark Williams, Director of Operations, BizFilings

Whether you are applying to a bank for:

 A line of home equity credit

 A line of credit for business working capital
 A commercial short-term loan
 An equipment loan
 Real estate financing
 Some other type of commercial or consumer loan
Many of the same basic lending principles apply. 

Five Keys of Loan Applications

The most fundamental characteristics most prospective lenders will concentrate on include:

1. Credit history 
2. Cash flow history and projections for the business
3. Collateral available to secure the loan
4. Character 
5. Myriad pieces of loan documentation that includes business and personal financial statements, income tax returns, a
business plan and that essentially sums up and provides evidence for the first four items listed
The first three of these criteria are largely objective data (although interpretation of the numbers can be subjective). 

The fourth item—your character—allows the lender to make a more subjective assessment of your business's market appeal and the
business savvy of you and any of your fellow operators. 

In assessing whether to finance a small business, lenders are often willing to consider individual factors that represent strengths or
weaknesses for a loan. 

Tools to Use
To give you an idea of what banks specifically focus on when reviewing a loan request, the Toos & Forms section contains a
sample business loan application form that is typical of the kind of documentation you'll need to complete as part of your loan
application package.

We also include an internal bank loan review form used by one small community bank to make its own review of a small business loan.

Credit History
Lenders will want to review both the credit history of your business (if the business is not a startup) and, because a personal guarantee is
often required for a small business loan, your personal credit history.

We recommend obtaining a credit report on yourself and your business before you apply for credit. If you discover any inaccuracies or
problems, you can correct them before any damage to your loan application has occurred. If you can, find out which credit reporting
company your prospective lender uses and request a report from that company.

Reviewing Your Commercial Credit History

Before you apply for commercial credit, you should review a credit report on your own business, if your business has been in existence for a
while. You can obtain a free Business Information Report on your own business from Dun & Bradstreet. 

If D&B does not yet have any information on you, they will allow you to voluntarily obtain a listing by providing them with some basic
information about your business.

Most conventional lenders will expect a minimum of four or five trade experiences listed on a business report before they consider the
business creditworthiness. If you have been operating your business without credit, or with personal assets, you should consider making
some trade credit purchases in order to establish a credit history for your enterprise.

Reviewing Your Consumer Credit History

Consumer credit agencies are required to remove any information from the report that cannot be verified or has been shown to be
inaccurate. However, before you submit a letter disputing any debt to the credit reporting company, it's often a good idea to contact the
relevant creditor directly. If an error was made, you can often clear up the dispute more quickly if you take the initiative.

If the dispute is not resolved and your credit report is not adjusted, you have the right to file a statement or explanation regarding the alleged
debt with the credit report. If your credit report does have some tarnish on it, you might consider requesting that any creditors with whom you
have had a good credit history, but who did not report the transactions, be added to the report. For a minimal fee, most credit bureaus will
add additional creditor information.

Work Smart
The three major consumer credit reporting companies are TransUnion, Experian, and Equifax. Dun & Bradstreet is the
largest business  credit reporting agency.

Providing Collateral to Secure a Loan

When it comes to obtaining a secured loan, providing collateral is a must. To a bank, collateral is simply defined as property that secures a
loan or other debt, so that the lender may be seize that property if the you fail to make proper payments on the loan.

Understanding Your Collateral Options

When lenders demand collateral for a secured loan, they are seeking to minimize the risks of extending credit. In order to ensure that the
particular collateral provides appropriate security, the lender will want to match the type of collateral with the loan being made. 

The useful life of the collateral will typically have to exceed, or at least meet, the term of the loan. Otherwise, the lender's secured interest
would be jeopardized. Consequently, short-term  assets such as receivables and inventory will not be acceptable as
security for a long-term loan, but they are appropriate for short-term financing such as a line of credit.
 In addition, many lenders will require that their claim to the collateral be a first secured interest, meaning that no prior or superior liens exist,
or may be subsequently created, against the collateral. By being a priority lien holder, the lender ensures its share of any foreclosure
proceeds before any other claimant is entitled to any money.

Protecting Your Collateral

Properly recorded security interests in real estate or personal property are matters of public record. Because a creditor wants to have a
priority claim against the collateral being offered to secure the loan, the creditor will search the public records to make sure that prior claims
have not been filed against the collateral.

If the collateral is real estate, the search of public records is often done by a title insurance company. The company prepares a "title report"
that reveals any pre-existing recorded secured interests or other title defects. If the loan is secured by personal property, the creditor typically
runs a "U.C.C. search" of the public records to reveal any pre-existing claims. The costs of a title search or a U.C.C. search is often passed
on to the prospective borrower as part of the loan closing costs.

In startup businesses, a commonly used source of collateral is the equity value in real estate. The borrower may simply take out a new, or
second, mortgage on his or her residence. In some states, the lender can protect a security interest in real estate by retaining title to the
property until the mortgage is fully paid.

Determining a Loan-to-Value Ration

To further limit their risks, lenders usually discount the value of the collateral so that they are not extending 100 percent of the collateral's
highest market value. 

This relationship between the amount of money the bank lends to the value of the collateral is called the loan-to-value ratio. The type of
collateral used to secure the loan will affect the bank's acceptable loan-to-value ratio. 

For example, unimproved real estate will yield a lower ratio than improved, occupied real estate. These ratios can vary between lenders and
the ratio may also be influenced by lending criteria other than the value of the collateral. Your healthy cash flow may allow for more leeway in
the loan-to-value ratio. A representative listing of loan-to-value ratios for different collateral at a small community bank is:

 Real estate: If the real estate is occupied, the lender might provide up to 75 percent of the appraised value. If the
property is improved, but not occupied, such as a planned new residential subdivision with sewer and water but no
homes yet, up to 50 percent. For vacant and unimproved property, 30 percent.
 Inventory: A lender may advance up to 60 percent to 80 percent of value for ready-to-go retail inventory. A
manufacturer's inventory, consisting of component parts and other unfinished materials, might be only 30 percent.
The key factor is the merchantability of the inventory—how quickly and for how much money could the inventory be
sold.
 Accounts receivable: You may get up to 75 percent on accounts that are less than 30 days old. Accounts
receivable are typically "aged" by the borrower before a value is assigned to them. The older the account, the less
value it holds. Some lenders don't pay attention to the age of the accounts until they are outstanding for over 90
days, and then they may refuse to finance them. Other lenders apply a graduated scale to value the accounts so
that, for instance, accounts that are from 31 to 60 days old may have a loan-to-value ratio of only 60 percent, and
accounts from 61 to 90 days old are only 30 percent. Delinquencies in the accounts and the overall creditworthiness
of the account debtors may also affect the loan-to-value ratio.
 Equipment: If the equipment is new, the bank might agree to lend 75 percent of the purchase price; if the
equipment is used, then a lesser percentage of the appraised liquidation value might be advanced. However, some
lenders apply a reverse approach to discounting of equipment. They assume that new equipment is significantly
devalued as soon as it goes out the seller's door (e.g., a new car is worth much less after it's driven off the lot). If the
collateral's value is significantly depreciated, loaning 75 percent of the purchase price may be an overvaluation of
the equipment. Instead, these lenders would use a higher percentage loan-to-value ratio for used goods because a
recent appraisal value would give a relatively accurate assessment of the current market value of that property. For
example, if a three-year-old vehicle is appraised at $15,000, that's probably very close to its immediate liquidation
value.
 Securities: Marketable stocks and bonds can be used as collateral to obtain up to 75 percent of their market value.
Note that the loan proceeds cannot be used to purchase additional stock.

Establishing Your Cash Flow from Operating Your Business

The cash flow from your business's operations—the cycle of cash flow, from the purchase of inventory through the collection of accounts
receivable—is the most important factor for obtaining short-term debt financing.
Understanding Your Cash Flow Cycle
 A lender's primary concern is whether your daily operations will generate enough cash to repay the loan. Cash flow shows how your major
cash expenditures relate to your major cash sources. This information may give a lender insight into your business's market demand,
management competence, business cycles, and any significant changes in the business over time.

Tools to Use
Included among the Tools & Forms is a cash flow budget worksheet. The worksheet is an Excel template that can be used in Excel
4.0 or higher. Because it's a template, you can use the worksheet over and over again and still retain an original copy of it.

The worksheet is set up to be used for projecting your cash flow for six months. We've formatted the worksheet and put in most of the cash
inflow and outflow categories for you. All you have to do is put in your numbers and print it.

While a variety of factors may affect cash flow and a particular lender's evaluation of your business's cash flow numbers, a small community
bank might consider an acceptable working cash flow ratio—the amount of available cash at any one time in relationship to debt payments—
to be at least 1.15:1.

As most lenders are aware, cash flow also presents the most troubling problem for small businesses, and they will typically require both
historic and projected cash flow statements. In preparing cash flow projections for newer businesses, you may want to refer to any one of
several sources that publish sales/expense ratios for specific industries. The ratios will help you compute realistic sales revenues and the
proportion of expenses typically necessary, in that industry, to generate the projected sales revenue.

Warning
A business's cash flow will usually include not only the money that goes in and out of the business from its operations (sales less expenses),
but also any cash flow from investments or financial activities (e.g., payments and receipts of interest and dividends, long-term contracts,
insurance, sales or purchase of machinery and other capital changes, leases, etc.) However, the most important component to a lender is
simply whether the business's ongoing sales and collections represent a sufficient and regular source of cash for repayment on a loan.
Because of the attention that cash flow receives, you may want to consider our suggestions for improving your positive cash flow.
Improving Your Cash Flow
If you're trying to improve your odds of getting a business loan, we suggest you review the following practices of your business:

 Pay off, or delay paying, debt. If possible, pay off existing debt or refinance the debt for a longer maturity with
lower payments. For other debts, try to renegotiate payment lengths. Believe it or not, some creditors may allow
some delinquencies as long as some money is coming in. In some situations, you may simply have to prioritize
those creditors who must be paid because they are providing necessities—such as utilities, certain suppliers,
payroll, etc.—and try to delay payments to creditors who are less likely to halt your business—like secondary
suppliers.
 Collect receivables. Try to quickly collect overdue accounts. Revenues are lost when a firm's collection policies are
not aggressive. The longer your customers' balance remains unpaid, the less likely it is that you will receive full
payment.
 Reduce credit allowances and accelerate cash receipts. If you can tighten credit terms without losing good
customers, you can increase available cash on hand and reduce the bad debt expense. You can also encourage
cash sales through discounting and pricing policies. In addition, try to reduce the float time on customer payment
checks. You can do this by undertaking prompt processing of checks as you receive them, using a bank lockbox
arrangement in which you pay a fee for the bank to collect and process all incoming payments, and by shopping for
a bank that quickly processes negotiable instruments.
 Increase revenues. While this suggestion is an obvious goal of every business, a poor cash flow may indicate that
you need to seriously reconsider what steps you can take to increase sales revenues by either raising sales volume
and/or altering prices. In reviewing ways to increase cash flow through increased sales, guard against allowing too
many credit purchases. Extending credit will increase your accounts receivable, not your cash.
 Reduce inventory. If you can reduce the amount of inventory you maintain, your cash outflow should decrease.
 Review tax strategies that may help cash flow with your accountant. For instance, a tax credit may be available
for job opportunities you create for certain disadvantaged employees, "qualified research" (research and
development) costs or the expenses of property renovation or rehabilitation of certain qualified buildings. In addition,
accelerated depreciation on certain equipment and tangible property may be available to increase your short-term
tax deductions.
For more ideas on this subject, see our detailed discussion of improving your cash flow.

Assessing Your Character as a Potential Business

Borrower
The weight given to a lender's assessment of a borrower's character can vary tremendously between lending institutions and between
individual lending officers. Many small businesses have found more success "selling" their reputation and good character to smaller
community banks who may be more directly affected by the economic health of the surrounding community.
 To ensure you're selling yourself well to your lender, we've compiled the most important steps to follow.

Improving Your Character in Front of Lenders

As a general rule, the following traits are considered the most important when a bank considers your character:

 Successful prior business experience

 An existing or past relationship with the lender (e.g., prior credit or depositor relationship)
 Referrals by respected community members
 References from professionals (accountants, lawyers, business advisers) who have reviewed your proposals
 Community involvement
 Evidence of your care and effort in the business planning process 
Many banks consider the amount of investment the owners themselves are committing to the business as evidence of a borrower's
"character." On top of that, many commercial lenders want the owner to finance between 25 percent to 50 percent of the projected cost of a
startup business or new project. If your investment is considered insignificant, a lender may consider it a lack of both owner confidence and
dedication to the business.

Warning
One banker noted to us that he often relies upon reaching a personal "comfort level" with a borrower before making a loan. This comfort level
is based upon the degree of trust or confidence that the banker has in the accuracy of the information and documentation being presented to
him. He observed that in their zeal to "sell" him on the profitability of their business, small business borrowers sometimes talk him out of this
comfort level by disclosing that their tax returns underreport income and overstate expenses. Such disclosures cast doubt upon the credibility
of the loan applicant, and impair any sort of trust or confidence between the banker and the prospective borrower.

Preparing Bank Loan Documentation

The process of applying for a loan involves the collection and submission of a large amount of documentation about your business and
yourself. 

The documents required usually depends upon the purpose of the loan, and whether your business is a startup or an already-existing
company.

Documentation for Startups

A bank will typically request, at a minimum, the following documentation for a startup business:

 A personal financial statement and personal federal income tax returns from the last one to three years
 Projected startup cost estimates
 Projected balance sheets and income statements for at least two years
 Projected cash flow statement for at least the first 12 months
 Evidence of ownership interests in assets, such as leases and contracts, and collateral
 A business plan that includes a narrative explaining the specific use for the requested funds, how the money will
assist the business and how the borrowed funds will be repaid (repayment sources and duration of repayment
period), including identifying any assumptions used in developing your projected financial 
 A personal resume, or at least a written explanation of your relevant past business experience
 Letters of reference recommending you as a reputable and reliable business person may also help your chances for
a loan approval
Some lenders will also want you to submit a breakeven analysis in the form of a financial statement or a graph. A breakeven analysis
shows the point at which the company's expenses will match the sales or service volume. The breakeven point can be expressed in terms of
dollars or units sold.
Tools to Use
The Tools & Forms section contains a sample personal financial statement that is typical of the kind of documentation you'll need
to complete as part of your loan application package.
We also provide Excel spreadsheet templates that allow you to create your own balance sheets, income statements and cash flow
budgets. Because these files are in template form, you can customize them and use them over and over again.
Documentation for Existing Businesses
 For an existing business, you can anticipate a request to produce:

 Income statements and business balance sheets for the past three years
 Projected balance sheets and income statements for two years
 Projected cash flow statements for at least the next 12 months
 Personal and business tax returns for the last three years
 A business plan, depending upon the credit history of your business and the purpose for the loan, may be
unnecessary, and a brief narrative of your intentions may suffice

 Additional Documentation Requests to Expect

Depending upon the specific type of loan you are seeking, you should also address certain issues germane to that loan type. 

For instance, if money is requested for working capital, your documentation should include: 

 The amount that will be used for accounts payable, along with an accounts receivable aging report to disclose the
current amounts overdue 30 to 60 days or older
 The amounts that will be used for inventory and any increase in the number of days that inventory on hand will be
held
 The amount your cash balances will be increased
 A contingency amount that is equal to at least 10 percent but preferably 25 percent. 
If money is needed for machinery or equipment, include information that addresses:

 Whether the assets will be immediately available or if a delay is anticipated

 The price of the assets and how installation will be performed
 Whether installation will interfere with current production and the cost of any interruptions
Documentation for an acquisition of land financing should include the real estate's cost, location and size, intended use, and whether any of
the land is for future expansion.
Category : Business Finance
Tags :
 Loans For Small Business

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Home » Business Plans » Financial Services »

Writing a Microfinance Bank Business Plan [Sample

Template]
Are you about starting a Microfinance bank? If YES, here is a complete sample
Microfinance bank business plan template & feasibility report you can use for FREE.
Okay, so we have considered all the requirements for starting a Microfinance bank. We also
took it further by analyzing and drafting a sample Microfinance bank marketing plan
template backed up by actionable guerrilla marketing ideas for Microfinance banks. So let’s
proceed to the business planning section.
Table of Content [show]

Why Start a Microfinance Bank?

Microfinance banks are small banks that offer loans, savings and insurance to
entrepreneurs and small business owners who can’t access traditional sources of capital,
like banks or investors. The main objective of microfinance banks is to provide people with
money to invest in themselves or their business.
Microfinance banks are different from commercial banks. For instance, funding to
commercial banks usually take place through public offers (stock markets) in the form of
equity, while Microfinance banks usually receive their funding from individuals/private equity
holders in the form of debt.
Also most of the services commercial banks offer are bank door services, which mean the
customers’ need to go to the banks to avail themselves such financial services. But most of
the services provided by Microfinance banks are door step services, which means the staff
of the banks deliver their financial services at client’s door step.
Starting a microfinance bank in modern America won’t be an easy task, but nothing they
say can stop the success of a determined mind. Below is a well drafted business plan if you
want to start Microfinance bank in the Nigeria.

A Sample Microfinance Bank Business Plan Template

Industry Overview
Microfinance banks provide microloans to individuals and small businesses. These
individuals and small businesses tend to go for loans to be able to pay for the purchase of
real estate and other transactions. This demand in turn makes the microfinance bank
business a recession-proof business.
According to industry reports, the stages of growth and development of a microfinance
industry are usually classified into four segments, for ease of analysis. These are the
pioneer stage, the breakout stage, the consolidation stage and the maturity stage. The
requirements for the survival of an industry at each of the different stages of development
may differ significantly. And so are the nutrients and corrective action in case of challenges.
Report has it that the Nigerian microfinance industry started officially in 2005 (the
International Year of Microcredit as declared by the United Nations) with the release by the
Central Bank, of the Microfinance Policy Framework for Nigeria. Note that the practice of
microfinance or its precursor, microcredit, has been in Nigeria for a much longer time.
It manifested in the activities of moneylenders, regulated under the Moneylenders Act, and
other different forms of rural or informal credit market operations. We believe that the high
end of it existed in the form of Non-governmental Organizations (NGOs), governed by
cooperative rules and regulations.
Industry pioneers were motivated by the need to help in canalizing financial resources,
basically in the form of microcredit, to micro-enterprises that constitute over 90 per cent of
Nigerian business entities. It is believed that 70% of over 170 million Nigerians live below
the poverty line. Evidently therefore, there was a lot to do in the area of the fight against
poverty, and microfinance was a fitting instrumentality.

Executive Summary
Ambassador Microfinance Bank, LLC (AMB LLC) is a new microfinance bank in Asaba,
Delta State, that will provide micro lending and mortgage loan services to small businesses,
real estate professionals, builders and individual home buyers.
AMB LLC has access to a full range of microfinances and we offer the right loans–with the
best rates, terms and costs–to meet our client’s basic needs. We hope to bring high-quality
micro lending and mortgage loan services to residential and business customers scattered
all over Asaba.
Our plan at AMB LLC is to create a family like platform at our bank, where customers can
feel comfortable to analyze the services they want. We also plan to create a unique work
environment that is challenging, rewarding, innovative, and respectful of our customers and
employee’s needs.
Asaba is a city strategically located on a hill at the western edge of the Niger River,
overlooking its sister city, Onitsha, across the Niger Bridge. This beautiful city is the capital
of Delta State Nigeria. A fast developing urban area, Asaba has a population of 149,603 as
at the 2006 census, and a metropolitan population of over half a million people.
This city was established during the time of the Royal Niger Company (now UACN) and is
currently relishing the status of being the administrative capital of Delta state, but due to the
fact that Aniocha-Oshimili people maintain the identity of being Igbo, a lot of Igbo from the
east of the Niger river invest in Delta state and precisely at Asaba thus improving the
economic fortunes of Asaba area and Delta state in general.
The Delta State government also contributes to the economic development of this city by
ensuring an economic platform where small businesses can thrive. Also the construction of
a multipurpose dam at Ubu River could be useful in generating electricity.
AMB LLC is created as an L.L.C. in order to avoid double taxation found with a corporation
yet realizing the benefits of personal liability avoidance. We will be occupying a standard
office facility in the business district of the city, giving us the suitable traffic to attract
customers.
We have put plans in place to ensure we mould AMB LLC into the very best in the niche we
have chosen. We at AMB LLC have also identified several milestones which will act as
ambitious yet achievable goals for the business.
By establishing the goals, the need to reach them will develop an implicit incentive for all
members to work hard to achieve the milestones. AMB LLC is capitalized by two principal
investors, Mr Innocent Udensi and Mrs Martha Asika. Both are well renowned in the micro
lending industry with a combined experience of over 25 years in the industry.
Our Products and Services
We at AMB LLC plan to offer unique services within the confines of the micro lending and
mortgage loan services. We have analysed our industry and have settled for services we
can offer our clients effectively. We have also employed a solid workforce with the specific
talents to help us offer these services. We plan to do everything within the proximity of the
law to reach our business goals. Our business offering are listed below;

 Provide loans to small businesses

 Providing equipment loans
 Providing vehicle loans
 Offer residential mortgages
 Providing mortgage financing online
 Providing home equity loans online
 Providing an online mortgage marketplace
 Offer commercial and industrial mortgages
 Providing home equity loans
 Offer residential mortgages loans online
 Providing other related loan cum mortgage consulting and advisory services

Our Mission and Vision Statement

 Our vision at Ambassador Microfinance Bank is to build a reliable partnership with

individuals, small businesses and corporate clients in Asaba Delta State.
 We plan to provide better services and be regarded better in all of Delta State.
 Our mission at Ambassador Microfinance Bank is to provide professional, reliable and
trusted microloan services that will help individuals, small businesses, corporate
organization, and non-profit organizations to reach their desired goals.
 We plan to build a business that will become one of the leading microfinance banks in
all of Delta State.

Our Business Structure

We at AMB LLC understand that micro finance banks operate in the same way other banks
and micro lending services firms do. These financial service institutions get people to invest
with them and pay them interest, while lending out that money to people who ask for loans
and charge interest on those loans.
We have done our research and have decided to improvise or adopt a business process
and structure that will guarantee us good return on investment (ROI), efficiency and
flexibility. We have explicitly listed the portfolios we plan to fill and work with at AMB LLC.
We believe that these portfolios will be filled with well experienced and learned individuals,
who understand and are ready to align with our company’s visions. We also hope to hire
people that are qualified, hardworking, and creative, result driven, customer centric and are
ready to work to help us build a prosperous business that will benefit all our stake holders
(the owners, workforce, and customers).

 Chief Executive Officer

 Business consultant
 Human Resource and Admin Manager
 Sales and Marketing director
 Company accountant
 Loan officers
 Debt collectors
 Receptionist
 Cleaner
 Guards

Job Roles and Responsibilities

Chief Executive Officer

 The Chief Executive Officer will be tasked with providing work direction for the
business
 He will be tasked with building, communicating, and implementing the vision, mission,
and direction of AMB LLC – which also includes leading the achievement and
implementation of all strategies.
 The Chief Executive Officer is also tasked with fixing prices and signing business deals
for the business
 He is also in charge of employment
 He also pays workers salary
 He signs checks and documents for and on behalf of the agency
 The Chief Executive Officer also evaluates the success of the organization

Business Consultant

 Will be tasked with providing residential microloans

 In charge of providing commercial and industrial microloans
 Will be obligated to provide home equity loans
 Also provides equipment loans
 Charged with providing vehicle loans
 Providing residential mortgages loans online
 Is also tasked with fixing micro and mortgage financing online
  The business consultant is also charged with fixing home equity loans online
 Provides an online micro and mortgage marketplace for the company
 Also in charge of providing mortgage related loan cum lending consultancy

Human Resource and Admin Manager

 Oversees the running of HR and administrative tasks for AMB LLC

 Tasked with Monitoring office supplies by checking stocks; placing and expediting
orders; evaluating new products.
 Makes sure of the operation of equipment by completing preventive maintenance
requirements; calling for repairs.
 Tasked with stating job positions for recruitment and managing interviewing process
 In charge of organizing induction for new team members
 Tasked with organizing trainings, evaluation and assessment of employees
 In charge of arranging travel, meetings and appointments
 Tasked with overseeing the smooth running of the daily office activities.

Sales and Marketing director

 In charge of organizing external research and coordinating all the internal sources of
information to retain the organizations’ best customers and attract new ones
 Expected to understand, prioritizes, and reaches out to new partners, and business
opportunities et al
 The sales and marketing director is also charged with creating, executing and
evaluating new plans for expanding sales
 Keeps all customer contact and information
 Represents the company in strategic meetings
 Aid to increase sales and growth for the business

Company accountant

 The company accountant is in charge of preparing financial reports, budgets, and

financial statement
 Also provides the managements with financial analyses, development budgets, and
accounting reports
 The company accountant is also tasked with the company’s financial forecasting and
risks analysis.
 Should be able to understand and take care of the firm’s cash management, general
ledger accounting, and financial reporting
 Tasked with developing and managing financial systems and policies
 The company secretary is also responsible of administering payrolls
 Ensures that AMB LLC complies with taxation legislation
 Also take care of all financial transactions for AMB LLC
 Is the internal auditor for the organization

Loan Officer
  Communicating to customers why their loan was either approved or denied and
providing evidence to back up those determinations.
 Keeping loan documents and conversations private in order to maintain customer
confidence.
 Staying up-to-date with any changes in the industry by furthering your knowledge of
the business through educational opportunities, participating in business-related
seminars, and professional networking.
 Responding promptly to phone calls and emails from customers about their loan or
loan application process.
 Meeting with individuals and businesses in order to accurately analyze their credit,
financial status and any property they have.
 Being able to handle any customer complaints and questions about the loan process
and having the ability to fix any lingering issues related to their particular loan.
 Advising customers and helping them accrue the various copies of individual and
business-related financial documents, credit histories and whichever other financial
documents are required in order to fulfill the loan requirements.
 Providing loan applicants with the various types of credit options available and the
terms related to those options.
 Explaining to potential customers the viability of certain loans in relation to an
individuals or businesses financial standing.
 Denying or approving loans based on the specific financial limits of the individual or
business and being able to offer alternatives when necessary.
 Being able to adequately resolve any snags in the mortgage application process.
 Submitting any and all paperwork related to the loan to credit analysts in order to make
sure that loan applicants can get their documents verified and therefore recommended
towards the right type of loan for them.
 Figuring out the different payment scheduling options available to customers, as well
as helping to review and update any loan or credit files.
 Operating with class and adhering to all laws, regulations, and compliance guidelines.

Debt Collector

 Keep track of assigned accounts to identify outstanding debts

 Plan course of action to recover outstanding payments
 Locate and contact debtors to inquire of their payment status
 Negotiate payoff deadlines or payment plans
 Handle questions or complaints
 Investigate and resolve discrepancies
 Create trust relationships with debtors when possible to avoid future issues
 Alert superiors of debtors unwilling or unable to pay when necessary
 Comply with requirements when legal action is unavoidable

Receptionist

 The receptionist is expected to welcome clients by greeting them in person or on the

telephone; answering or directing inquiries.
 Is tasked with providing all clients with a personalized customer service experience of
the highest level
  Is expected to use every opportunity to build client’s interest in the company’s products
and services
 Be aware of any new information on the company’s products, promotional campaigns
etc. to ensure accurate and helpful information is supplied to clients
 The receptionist will also receive parcels / documents for the company
 It’s tagged with distributing mails in the organization
 Handles any other duties as assigned by the Admin manager

Cleaners

 In charge of the cleaning the floors of AMB LLC facility

 Keep note and make sure the toiletries and supplies don’t run out of stock
 Ensures that both the interior and exterior of the firm are always clean
 Handles any other duty as assigned by the restaurant manager.

Security guard

 The security guard is in charge of protecting the firm and it’s environs
 Also controls traffic and organize parking
 Should also patrol around the building on a 24 hours basis
 It’s expected to give security reports weekly

SWOT Analysis
Our plan as a microfinance bank is to establish well– structured microloan services that will
be of good help to our clients. That is why we contacted an experienced consultancy firm, a
firm known for its precise way of doing business and also renowned for offering the best.
We employed the services of Jefferson consults to help us conduct a SWOT Analysis in our
designated business location. Below is a summary from the result of the SWOT analysis
that was conducted for AMB LLC;

 Strength

According to our SWOT analysis, our strength at AMB LLC rests on the capacity, vision and
experience of our team. We can boast of having a team that is prepared to offer our clients
the very best; a team that is well placed, professional and ready to pay attention to details
and to maximize financial profits for the business.

 Weakness

According to our SWOT analysis conducted by Jefferson Consults, our weakness at AMB
LLC will be the time it will take us to break into the market and gain acceptance since we
are just a new microfinance bank. But we have designed a marketing plan that will take us
through that stage as quickly as possible.

 Opportunities
We at AMB LLC understand the enormous opportunities in the lending industry, especially
judging by the number of people, business startups and corporate organizations who are all
in need of microloans to help them reach their individual goals and vision. AMB LLC being a
standard and well positioned Microfinance bank is well prepared to offer microloan and
mortgage loan services to see to the needs of this growing target audience.

 Threat

Jefferson Consults in the SWOT analysis conducted for AMB LLC noted that our threat in
this business will include unfavourable government policies, the introduction of a competitor
within our location of operation and global economic downturn which usually affects
purchasing / spending power.
They went further to advise us at AMB LLC to be aware of huge losses in three situations:
due to sharp, sustained increases in interest rates, accounting control fraud, or the collapse
of hyper-inflated residential real estate bubbles. That is why to mitigate these threats, we
have introduced the use of credit scoring software and we have created counter plans for
each possible threat.

MARKET ANALYSIS

 Market Trend

We at AMB LLC understand that the formal introduction of a national policy on microfinance
would change a lot of things in the industry. It will legitimize the illegal operators; and
encourage the inflow of capital funds to the sector. That is why some of the pioneer
institutions in the industry have transferred their already public positive attributes to become
industry leaders.
LAPO microfinance is still the number one player in this field creating wealth and blazing the
trail. We at AMB LLC believe that policy objective at the pioneer stage of the industry should
centre on the promotion of stability and confidence. Regulation should be strict and
transparent or at least evoke the image of transparency, while intervention is swift, all in a
bid to win popular confidence of stakeholders.
Experts in the industry expect a huge expansion in the number of participants. This is
strategically driven by the level of success achieved by the pioneers. Being a
monopolistically competitive market, the fairly easily achievable conditions for entry
(licensing) enable profit-seekers to come and compete for the presumed profit available in
the sector.
According to statistics, Nigeria now has over one thousand microfinance banks and several
providers organised as NGOs. This is a clear indicator that the industry in Nigeria is
attractive to investors who are willingly staking their capital.
Our Target Market
Our first aim at AMB LLC is to serve small to medium sized business, from new ventures to
other bigger businesses and individual clients. We plan to be decisive in all steps and
approach our market one step at a time. We at AMB LLC plan to offer the best possible
microloan services, hence we’ve made sure all our employees are well trained and
equipped to serve a diverse range of clientele base.
Our target audience at AMB LLC will cut across businesses of different sizes and
individuals. Outlined below is the list of businesses and organizations that we have
categorically designed our products and services for;

 Small businesses
 Individuals and interested home owners
 Real Estate companies and investors
 Non-governmental organizations
 House of worships and other religious organizations
 Educational institutions
 Corporate companies

Our competitive advantage
We at AMB LLC understand that the level of competition in the microfinance banking
industry does not in any way depend on the location of the business since most micro
finance banks and other microloan businesses can operate online and from any part of the
world and still effectively compete in the industry.
We have made plans to ensure we penetrate the market and offer our customers what they
really want – easy access to microloans; thereby deleting the hard and long process
needed to obtain loans from the bank and other financial institutions. Another advantage we
have in this industry is the quality and experience of our workforce. The owners, down to
every employee at AMB LLC, are all well trained to function well in the microfinance
industry.
We have also, through the help of Jefferson Consult, established a comfortable business
environment for our employees by offering work bonus and loyalty bonus which will be
calculated with more or less 10 years duration. This we believe will push our employees to
give their all and stay loyal to the business and also help build a classic competitive
microfinance bank.

 Sales and Marketing strategy

Our marketing effort at AMB LLC will focus on our ability to empower people to make a
substantial difference in their world while getting a great return on their money. We plan to
make use of magazine advertisements and community based marketing (networking,
sponsorship and participation in seminars) to grow our business visibility.
We plan to make our advertisements steady so that people will become aware of the
investment options we offer at our bank. We will participate in numerous on-topic events
and seminars that will display AMB LLC as experts as well as give us a podium to describe
our different services. We hope to make use of the listed strategies to build our business;

 We plan to introduce AMB LLC by sending introductory letters with our business
brochure to individuals, households, corporate organizations, schools, players in the
real estate sector etc
  We also plan to advertise AMB LLC in important financial and business related
magazines, newspapers, TV and radio stations
 We also plan to attend important international and local real estate , finance and
business expos, seminars, and business fairs et al
 We also hope to create different packages for different category of clients (individuals,
startups and established corporate organizations) in order to work with their budgets
 We also plan to make use the internet to promote our business
 We hope to encourage word of mouth marketing from loyal and satisfied clients

Publicity and Advertising Strategy

In order to achieve our publicity and awareness goals, we at AMB LLC have contacted the
services of Stella Maris Advertising Experts, a renowned venture in business development
and publicity, to help us create publicity and advertising strategies that will help us at AMB
LLC to attract and keep our target audience interested. Listed below is the summary of
capable strategies suggested by Stella Maris Advertising Experts for AMB LLC;

 Place adverts on both print (community based newspapers and magazines) and
electronic media platforms; we will also advertise AMB LLC on financial magazines,
real estate and other relevant financial programs on radio and TV
 Sponsor relevant community based events
 Leverage various online platforms to promote the business. This will make it easier for
people to enter our website with just a click of the mouse. We will take advantage of
the internet and social media platforms such as; Instagram, Facebook , twitter,
YouTube, Google + et al to promote our brand
 Place our billboards in strategic locations all around Asaba – Delta State.
 Share and distribute our fliers and handbills in target areas all around Asaba
 Ensure that all our workers wear our branded shirts and all our official vehicles are
branded with our company’s logo.

Sources of Income
AMB LLC was established to serve a specific need in the industry and to also generate
substantial revenue. Although our goal at AMB LLC is customer satisfaction in the
microloan business, but as a business, we want to make profits and grow our enterprise.
We plan to generate income by offering the following microloan services to individuals, real
estate companies, NGOs and corporate organization. We plan to maximize profits by
offering the following services;

 Provide loans to small businesses

 Provide equipment loans
 Provide vehicle loans
 Offer residential mortgages
 Provide mortgage financing online
 Provide home equity loans online
 Provide an online mortgage marketplace
 Offer commercial and industrial mortgages
 Provide home equity loans
  Offer residential mortgages loans online
 Provide other related loan cum mortgage consulting and advisory services

Sales Forecast
Our sales forecast at AMB LLC was conducted in a conservative fashion to avoid any
inflated expectations that might not be obtainable. We acknowledge that the first few
months of business will be slow. AMB LLC has projected steady, incremental growth in
sales.
This can be explained as a function of the increased proficiency in terms of sales for AMB
LLC services as well as the growing awareness of AMB LLC by the target customers.
Reviewed below is a detailed sales forecast for AMB LLC, which we believe and hope we
will surpass with hard work and perseverance. This sales forecast is also based on the
location of our business and the innovative business we will be offering to our clients.

 First Fiscal Year: N1, 650,000

 Second Fiscal Year: N2, 590,000
 Third Fiscal Year: N4, 328,000

Our Pricing Strategy
It’s very important to state that the microfinance industry is moved by the increase in
demand and availability of real estate / properties. That is why there can never be a price
model that will be suitable for the general lending industry. Indeed the prices for properties
and human needs fluctuate on a regular basis.
We at AMB LLC also understand that most lending firms rely on commissions since they
serve as middlemen between those seeking for microloans and the secondary financiers.
But we hope to establish a more direct approach by offering those loans ourselves which
can be very possible due to the large incentives our founders are willing to inject.
Our plan is to keep the prices of our services and commissions below the average market
rate for our clients for the main time. We also hope to provide them with loans coupled with
low interest rates that will bring them closer to the bank, and we hope to move our prices a
little higher when we have achieved a substantial corporate identity in the microfinance
business.

 Payment Options

We at AMB LLC have concluded plans to provide a wide variety of payment options for our
clients. We understand the need and the diverse countenances of people, and we plan to
provide a suitable platform that will suit all equally. We have chosen a well renowned bank
in the Nigeria to help make payment easier for our clients.
We have chosen and opened a corporate current account with Capital one financial
Corporation. Our bank account numbers will be made available in website and promotional
materials to clients who may want to make cash deposit and it will also be given to clients
on request. Listed below are the payment options that we will make available to AMB LLC.

 Payment through bank transfer

  Payment through online bank transfer
 Payment with check
 Payment with bank draft
 Cash payment to debt collectors

Financial Projections and Costing

The need for funds can’t be overlooked in the type of services we plan to offer at AMB LLC.
We understand that we need funds to put together a competitive business, especially in
Nigeria. We need funds to get a phone system, workstation computers, back end server,
DSL Internet connection, and laser printer.
Funds are needed to get office furniture, meeting room and waiting room furniture; to settle
monthly service charge for KDB software, purchase a Fax machine, copier, lighting, and
assorted office supplies. We have analyzed our needs and we plan to spend our startup
funds judiciously. Outlined below is a detailed financial projection and costing for starting
AMB LLC;

 Price of incorporating the Business in the Nigeria of America – N15,000.

 Our budget for basic insurance policy covers, permits and business license
– N200,000
 Acquiring a suitable Office facility opposite the city hall at Asaba Delta State (Re –
Construction of the facility inclusive) – N175,000
 The budget envisaged for capitalization (working capital) – N20 million
 Budget for settling other legal processes (acquiring business license and all city dues
et al) – N20,500
 Equipping the office with suitable and standard equipment(computers, software
applications, printers, fax machines, furniture, telephones, filing cabins, safety gadgets
and electronics et al) – N110,000
 Purchasing of the required software applications (CRM software, Accounting and
Bookkeeping software and Payroll software et al) – N10,500
 Launching AMB LLC official Website – N16,000
 Our expenditure for paying at least three employees for 3 months plus utility bills
– N120, 000
 Other Additional Expenditure (Business cards, Signage, Adverts and Promotions et al)
– N40,000
 Miscellaneous: N80,000

With the above detailed cost analysis, we need N5m and N20 million working capital to

successfully set up AMB LLC.
Note-: This cost is rather on the low-end as we didn’t factor in the cost of obtaining CBN
license for a Microfinance bank, which can either
be N20million or N100million or N1billion; depending on the size and operational style of
your Microfinance bank.

 Generating Startup Capital for AMB LLC

AMB LLC is a licensed and registered Microfinance bank which is capitalized by two
principal investors, Mr Innocent Udensi and Mr Martha Asika. Our founders plan to become
the very first financiers of the business, although we have plans of accepting partners at a
very ripe and mature stage in the business. Due to less constraint in financing AMB
Mortgages, we have outlined the few ways we can acknowledge funding and startup capital.
These ways may include;

 Generate part of the startup capital from the two principal investors
 Accept soft loans from family members and friends
 Agreeing to angel investors
 Apply for business loan from the bank (if need be)

Note: AMB LLC has been able to generate an enormous N5 million from its two principal
investors, who aligned and individually dished out N2,500,000 each. We have also aligned
with an angel investor to inject N20 million into AMB LLC, with the hope of making profits
and establishing a solid business.
BUSINESS GROWTH: Sustainability and Expansion Strategy
It is the goal of every business venture to grow and remain consistent in making profits and
acquiring customers. The baseline of every business lies in the number of loyal customers
in their clientele base and the competence of their employees, investment procedures and
the business structure they choose. We at AMB LLC understand our market and we have
established plans that will carry us thus far.
We believe with our unique business structure and competent hands will be able to help us
make the right decisions and start making profits from our forts year in business. We also
understand that one of the strategies of gaining approval and winning customers over is to
offer innovative services to our customers at a more affordable rate than what is obtainable
in the industry.
We have also made sure that we established the right platform, structures and processes.
We plan to make sure all our employees are well catered for and presented with an
environment that will help them stay innovative and current. AMB LLC will be run and
managed like a family with excellent values and ethics. We have also put together a profit-
sharing arrangement which will enable our management staff enjoy the fruit of their labour.
This arrangement will be decided upon during a considerable duration of 5 years and upon
decision of the board of the organization. With these and many more attractive employees
focused incentives, we hope to hire and retain employees that are the best in any field they
are hired for.
Check List/Milestone

 Business Name Availability Check: Completed

 Business Incorporation: Completed
 Opening of Corporate Bank Accounts: Completed
 Opening Online Payment Platforms: Completed
 Application and Obtaining Tax Payer’s ID: In Progress
 Application for business license and permit: Completed
 Purchase of Insurance for the Business: Completed
  Conducting feasibility studies: Completed
 Leasing, renovating and equipping our facility: Completed
 Generating part of the startup capital from the founder: Completed
 Applications for Loan from our Bankers: In Progress
 Writing of Business Plan: Completed
 Drafting of Employee’s Handbook: Completed
 Drafting of Contract Documents: In Progress
 Design of The Company’s Logo: Completed
 Printing of Promotional Materials: Completed
 Recruitment of employees: In Progress
 Purchase of the Needed software applications, furniture, office equipment, electronic
appliances and facility facelift: In progress
 Creating Official Website for the Company: In Progress
 Creating Awareness for the business (Business PR): In Progress
 Health and Safety and Fire Safety Arrangement: In Progress
 Establishing business relationship with banks, financial lending institutions, vendors
and key players in the industry: In Progress

Solomon. O'Chucks
Researcher / Senior Writer at Profitable Venture Magazine Ltd
Solomon O’chucks is a Researcher, Prolific Writer and a UNICEF trained & certified
Facilitator and Counselor, A Graduate of Morris Cerullor School of Ministry and He Holds a
Degree in Personal Development & Science of Success from IIGL Asheville, NC, USA.

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