Business Plan for Bank Loan
Give Your Business The Edge With the Best Business Plan for Bank Loans
All businesses need some investment, whether it is venture capital or bank financing. When you apply for a business loan from a bank, as part of your loan application, you will be required to submit your business plan along with other documents. However, you won’t be given a loan by default just because you have a business plan. Integral to the success of your loan application is how well structured the business plan for your bank loan is (see how to write a business plan).
Requirements of Business Plans for Bank Loans
Business plans are the blueprints to success. But writing and designing a comprehensive plan takes time, effort, and expertise. If your plan isn’t well-crafted, it will unquestionably hamper your chances of securing that coveted bank finance. A robust business plan for bank financing should ideally be 25 to 30 pages in length and should include graphs and charts in addition to the following:
- Plan Overview
- Executive summary
- Financial goals
- Debt repayment plan
- Start-up or growth summary
- Products or Services offered
- Market analysis
- Size of market
- Market breakdown
- Target demographic
- Market needs
- Marketing Information
- Marketing objectives
- Marketing strategy
- Competitive analysis
- Competitive advantages or USP
- Operations Analysis
- Key elements to achieve success
- SWOT analysis
- Market entry challenges
- Milestones and achievements
- Complete Financial
- Revenue forecast (5 years)
- Human resource forecast
- Break-even analysis
- Income Statement
- Cash flow statement
- Balance Sheet
- Sensitivity analysis
- Financial indicators
- Financial assumptions
Special Features of a Business Plan for a Bank Loan
Among the several factors that your loan officer will take into consideration, there are specific sections in your plan that will come more under his/ her microscope, including:
- Information on How Well you Understand your Industry and Market – From your business model, strategy and location to your products, services and company history if you have an existing business, your banker will look for criteria to gauge how successful your endeavor is, so that they can determine how it will probably fare further down the line. Even if the loan is secured by collateral, which it most likely will be, banks like to be part of success stories so they just don’t dole out loans to enterprises that don’t live up to their expectations.
- Balance Sheet – Most likely one of the first sections of your business plan to be scrutinized is your balance sheet because it is the best indicator of how well your business is performing. Since it is a statement of financial position, it lists information such as your assets, liabilities, the amount of equity you own and the amount of capital already sunk in your venture. In other words, it reflects your business’s net worth. Now if you have a startup and have no past activities to show, your balance sheet will illustrate your starting capital, expenses thus far, assets acquired or needed and any existing liabilities.
- Profit or Loss Statement and the Cashflow – Similar to the balance sheet this section of your business plan for bank financing will reflect the amount of cash flow in the past if you already have an established small or medium-sized business and also for the subsequent 12 month period. The latter is applicable to start-ups as well. Bankers are fully aware that profits don’t necessarily guarantee sufficient cash flow, so they will look at factors like your accounts receivable, accounts payable and inventory to determine how successful you will be.
Problems or Hurdles You Might Face
Did you know that the two most common factors for business failure are:
- Problems with cash flow
- Insufficient capital and financial calculation at the start
According to FitSmallBusiness, 30% of businesses fail because of a lack of funds,1 in every 6 small business loans fail and while small banks approved about 50.2% of loan applications, big banks only approved a dismal and alarming 26.9%. Which goes to show that banks are very cautious when it comes to approving business loans.
Plus, according to the most recent U.S. Small Business Administration (SBA) statistics, as of December 2018, 45% of approved small business loans were in the bracket of $350,000 to $2,000,000 while only a measly 7% were approved funding for amounts of $150,000 and below. This proves that banks prefer lending to bigger and more established businesses who showcase a stronger revenue and credit history.
So where does that leave mid-sized and small business owners and startups? It leaves them in need of a well-tailored business plan. Among all the other benefits of a well-written business plan, it will increase your ability to secure invaluable bank fundin. For more insight take a look at our business plan advisor).
Advantages of a Comprehensive Business Plan for a Bank Loan
A professional business plan is one of your company’s most important documents. Essentially, it is the map of your success and will bolster your endeavor with a plethora of benefits, including:
- Obtaining indispensable bank funding for current operations and expansions – this might include restructuring, reorganizing, planned divestiture and spin-offs
- Internal planning and forecasting – your company performance can be calculated by comparing actual and forecasted data, which includes sales, expenses, time frames, and strategy
- Marketing opportunities
- Financing requirements in the future that require your attention
- Establishing performance objectives and measuring results
- Assessing personnel performance by checking if they meet planned objectives
- Guiding decision-making process with regard to ongoing and potential operations
- Changing the trajectory of the business, restoring profitability and achieving set goals
What Businessplan.org Does
As established business plan consultants, our services are an amalgamation of the best expertise, in-depth market knowledge across many industries, a very talented pool of 60+ business plan writers and invaluable market experience across numerous domains. With a nation-wide presence and over 60 partner consulting offices, our business plan creation service is unrivaled, which is why if you want banks to open those avenues of opportunities, your best bet is going through us. We also review your business plan at any stage or you can fully outsource your business plan creation process to our experts.
The Benefits We Provide
Regardless of which loan program or bank you choose, a well-structured and informative professional business plan is undoubtedly the key to securing that invaluable business loan. When your business plan is meticulously laid out, it reflects your commitment to your brand. Which is why it is important to leave it in the hands of the experts. And since Businessplan.org is a nationally recognized business plan consultant with accolades to our name, there is no one more suited to the job.
- Our business plan writers will design a highly customized plan for you taking into cognizance your unique requirements and goals.
- In addition to our business plan experts’ extensive industry and market knowledge, regardless of the place you’re in, they will also help you gain invaluable insights into what it takes to make your endeavor succeed.
- Besides multiplying your chances of securing that business loan, with a well-structured business plan in place, you can even enhance your opportunity of securing venture capital should you need it in the future, as well as strategic partnerships that will take your business places.
- Plus, your plan will help you monitor the profitability and liquidity of your business, and if you have a start-up, will also help you check the viability of your endeavor.
- Furthermore we offer you the following advantages and guarantees:
How We Can Help You
We take pride in our high success rate of securing indispensable bank financing, giving our clients the ability to help grow their brands significantly. Since our focus is rooted in providing our clients with nothing short of 100% satisfaction, we also offer the most cost-effective business plan pricing. In addition to helping you optimize your return on investment, your plan will also help you grow your customer base and advance the trajectory of your brand significantly.
So if you are interested in securing that coveted bank loan, get in touch with us at Businessplan.org and give your business the wings it needs to soar sky high.