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The funds needed for the planned business start-up or the proposed expansion or new effort, and where the money will come from (personal, bank, etc.)
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The specific uses of these funds, including equipment lists, estimates for construction and/or installation, inventory to be purchased, or start-up or operating costs to be incurred before break even status is achieved.
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Where the money will come from to repay the loan or satisfy the return on investment (typically shown in the cash flow projections as Loan or Investment Repayment).
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The collateral available to secure the loan.
A. Source and Application of Funds; Collateral
Summary chart of the sources of all funds required for the start-up or expansion planned. Identify source, amount of funds from each source, terms or conditions, and status of commitment.
Collateral (hard assets that the bank can sell in the case of business failure to recover their investment) must be provided by the business, or the business and the owners. Even for a corporation, owners must provide personal financial statements (assets and liabilities) to the bank and may have to personally guarantee the loan.
B. Capital Equipment List
A listing of the specific equipment to be purchased, including the model or other description, cost per unit, source or supplier, whether new or used, anticipated useful life if not common knowledge, and other information to justify expense and need for funds.
C. Cash Flow Projections
Monthly chart of expected revenues and other cash available (loans and investments) compared to payment of expenses. Obviously, "Happiness is a Positive Cash Flow" and the enterprise cannot operate long with a negative cash position.
D. Explanation of Assumptions Used in Preparing the Projections
Explains assumptions in sufficient detail so that the reader can understand where the numbers in the Pro Forma were derived from, and can assess the reasonableness of the estimated revenues and expenses.
