How Your Business Plan Can Help With Loans
Often, business loan approval for startups and smaller companies relies on a solid business plan. Not only is a plan part of the required paperwork, a well-researched and written one can show investors how prepared you are and how the funding can help the company succeed. In addition to helping you secure funding, a good business plan can help guide your path through growth goals and adjust to reflect changes in the market, economy and company.
Banks require quite a bit of paperwork to apply for a loan including financial statements, credit reports and business plans. All this information is used to determine how much of a risk it is to lend you money and whether the payments will be too much of a financial burden on your company. Your business plan should include a cover page, table of contents and appendix to feel more professional as well as sections on your company description, market analysis and organizational structure. It should also include specifics like business goals, funding needs and marketing plans.
Shows How Prepared You Are
Being prepared with financial projections, budgets for different growth stages and a list of products or services you will be offering can show underwriters how prepared you are and increase your chances for a business loan approval. The appendix for many business plans will include sources for figures included in the other sections and you can put charts and graphs in to show that you have crunched the numbers for market approval, marketing and any necessary licenses or permits. Having a list of business goals that are broken down into necessary steps and timelines will show investors that you are prepared and ready to go as soon as you get the funding.
Reads Like a Shopping List
Investors and bank underwriters want to know where their money is going and how it will help meet your business goals. So your business plan is like a shopping list where you calculate startup and operating costs, project sales based on the equipment and supplies you need and project the budget for each step towards your goals. This will show the bank that giving you the money for a screen-printing system, for example, will allow you to expand your line of baby clothes to include customization options and appeal to more customers.
Your company’s growth goals probably depend on business loan approval, and that funding often depends on how well-written and researched your business plan is. The right plan can do more than just be part of the required paperwork by showing underwriters how prepared you are and what you plan to use the money for.