Business Letter

New business loan assignment

Name of student

Name of teacher

Morrison Consulting

To

Henry Banks

Assistant Vice President Business/Personal Loans

Fifth Third Bank

P.O. box 17800

Subject: Request for Loan for Diner

The reason behind choosing this business is that the only thing common in the different cultures is the meal. Secondly the food is the basic necessity of life. Thus if properly marketed and managed, the business will come out to be a huge success. However the consideration is more than the food itself. The company is supposed to sell the experience along with the food.

This letter is sent to you on behalf of our client Diner. The company will be in the seafood business with a profit generated over the last year. The company has also shown a positive cash flow over the same period of time. A ratio analysis has shown that the company would be able to pay off the short term debts. The profit generation ability of the company is good as the sales revenues are high. A cash flow of $ 2.4 M will mean that the company has enough amount of cash at disposal. The salaries take up a large percentage of the expenses.

The initial startup cost of the venture will be $ 39725. The major portion of this amount will be used to buy machinery and other accessories. The current funds with the company are $ 35000 thus showing a deficit of $ 4725.

Another important aspect is the breakup of sales by products. This is necessary because the sales of those products have to be increased that have inelastic demand so that revenues increase despite the decrease in the prices. This will also help the company to analyze which products are to be focused in the marketing strategy. The company will increase the sales gradually.

The following table shows the projected sales of the business for the first six months.

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Revenue:

Oysters

$15,246.00

$15,634.77

$16,033.46

$16,442.31

$16,861.59

$17,291.56

Fried Shrimp

$18,942.00

$19,425.02

$19,920.36

$20,428.33

$20,949.25

$21,483.46

Calamari

$9,147.60

$9,380.86

$9,620.08

$9,865.39

$10,116.96

$10,374.94

Catfish Sandwich

$21,991.20

$22,551.98

$23,127.05

$23,716.79

$24,321.57

$24,941.77

Salads

$24,948.00

$25,584.17

$26,236.57

$26,905.60

$27,591.70

$28,295.28

Fries

$9,240.00

$9,475.62

$9,717.25

$9,965.04

$10,219.15

$10,479.73

Sodas

$9,240.00

$9,475.62

$9,717.25

$9,965.04

$10,219.15

$10,479.73

Monthly Revenue

108755

111528

114372

117288

120279

123346

The above table shows the monthly expected sales for the first six months of the operations. If assessed overall, the sales of the company are increasing. The product wise analysis shows that the sales will increase for all every passing month.

The loan amount will be used to purchase the kitchen equipment and accessories. Our client believes in provision of quality food to the customers and this will be possible with a set of modern equipment.

The following table will show the two most important financial statements proposed for the business.

Conclusion

The above information presented in the document is meant to generate the loan facility for one of our clients. Any further information required will be provided to you promptly.

Diners

Proposed Income Statement

Sales

20000

Less: Cost of Goods Sold

8000

Gross Profit

12000

Other Expenses

Salaries

3500

Advertising

2700

Administrative

2400

Total

11400

Net profit

600

Diners

Proposed Balance sheet

Assets

$

Liabilities

$

Cash

10000

Payables

2275

Inventory

2000

Loan (Required)

4725

Machinery

15000

Capital

20000

27000

27000

The above balance sheet and income statement will be helpful to analyze the state of the business.

References

BIBLIOGRAPHY Adamou, F. A. (2018). Bank loan financing decisions of small and medium sized Enterprises: The significance of Owenr/ manager's behaviors. International journal of economic and Finance, 231-241.

freel, A. R. (2016). Business advice and lending in small frims. Environment and planning C: Politics and Space.