Whether you are an established business or just starting up, you’ll need capital. If that capital will come in the form of financing from a bank, you don’t want to think about approaching a bank to ask for a business loan, without a comprehensive business plan.
From the bank’s point of view, a business plan holds the answers to key questions they must know before deciding to grant your loan request. Answers to questions like:
When you think of a business plan, most people think of financial statements. While financial statements are a crucial part of the business plan, it must also include the following:
Executive summary – a brief summary of the business identifying key elements
Industry Overview – explanation of the business’s industry and trends
Market Analysis – Identify the business’s target market, the business’s competition, what is their advantage. Give a detailed explanation of your competitive sales strategy, pricing strategy, and advertising strategies.
Operating Plan – An outline of the business’s operating systems and management, including human resources, facilities, equipment, inventories and suppliers. Basically, an explanation of how the business works.
Again, an important section of the business plan will be the financial section. A current balance sheet, income statement and a cash flow projection, as well as, projected statements for 6 months, 3 and 5 years should be included. These projections should show the effect of the funds received from the bank, how the money will be spent and how it will be repaid.
Remember, your business plan and your loan application will ikely be be the bank’s first impression of the business. That’s exactly why your business plan needs to be professional and give a realistic view of the business venture. Professional does not have to be costly; but, do have your financial statements reviewed for human error before submitting your proposal to the bank. Also be prepared to present your personal financial information to the bank to support your business loan request, as well as the personal information of anyone else who will hold more than 20 percent interest in the business.
Having a solid business plan in place before applying for a business loan, will increase the likelihood of your application being accepted, and your loan being approved.
From the bank’s point of view, a business plan holds the answers to key questions they must know before deciding to grant your loan request. Answers to questions like:
- How does the business and the management operate
- Why, how and when is the company expected to make money
- How much money does the business need and when will it be able to pay the bank back
- How much personal financial risk have you invested in the business
- What is your experience and are you capable of running this business
- Putting together a solid business plan may seem like an overwhelming task; but, most of the information needed can be found in key business documents. The business plan puts all that information together and develops a guide to how the business is set up and how it operates. Also, it tells what the future goals of the business are.
When you think of a business plan, most people think of financial statements. While financial statements are a crucial part of the business plan, it must also include the following:
Executive summary – a brief summary of the business identifying key elements
Industry Overview – explanation of the business’s industry and trends
Market Analysis – Identify the business’s target market, the business’s competition, what is their advantage. Give a detailed explanation of your competitive sales strategy, pricing strategy, and advertising strategies.
Operating Plan – An outline of the business’s operating systems and management, including human resources, facilities, equipment, inventories and suppliers. Basically, an explanation of how the business works.
Again, an important section of the business plan will be the financial section. A current balance sheet, income statement and a cash flow projection, as well as, projected statements for 6 months, 3 and 5 years should be included. These projections should show the effect of the funds received from the bank, how the money will be spent and how it will be repaid.
Remember, your business plan and your loan application will ikely be be the bank’s first impression of the business. That’s exactly why your business plan needs to be professional and give a realistic view of the business venture. Professional does not have to be costly; but, do have your financial statements reviewed for human error before submitting your proposal to the bank. Also be prepared to present your personal financial information to the bank to support your business loan request, as well as the personal information of anyone else who will hold more than 20 percent interest in the business.
Having a solid business plan in place before applying for a business loan, will increase the likelihood of your application being accepted, and your loan being approved.
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