Business Plans: the New View for Acquiring Loans

When I started my freelance writing business in 2008, my early projects included business plans, resumes, and cover letters. At that time, more was better and a lengthy, detailed business plan was considered the gold standard.

I recently attended a national bank’s presentation on Funding Options for Small Business and one of the panel presenters stated that those gold standard business plans were now detrimental to the process. The reason: lenders want the facts. No need for fluff, graphics, or dissertation-quality business plans.

Then what makes a loan-worthy business plan? Keeping it simple and precise! Here’s what lenders are looking for:

Executive summary

  • Describe the business that’s being started.
  • How will it be managed & operated?
  • What is the business owner’s experience that will make it successful?
  • How will it be marketed?

Operation & systems:

  • How will the financials be handled? QuickBooks, paper, accountant?
  • How will spending be tracked and reported?

Financial plan:

  • 3 years of projected income—during the 1st year, break down income and expenses monthly; 2nd & 3rd year can be yearly projections.
  • Where is the money coming from? Where is the money going?
  • What factors will affect the net profit?

Projecting this information isn’t easy, but the overall purpose is to be realistic and honest in your expectations. Make your projections attainable to avoid unnecessary stress. Following this format, a stress free business plan can be generated in 6 to 10 pages; less than that gets questionable.

The second half of the lending process remains the same. Your lenders will examine personal and professional tax records to get an overview of your financial history. Proof of income is needed to gain a loan, and collateral may be required.

To expand a business requires money so the more prepared you are and the precision with which you prepare, will make the process easier for everyone. Talk to banking specialists, business experts, and utilize the resources available to make the process simpler for you too. Your business plan is your first content piece to get your business rolling.

Kristen Edens

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