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Why Do I Need a Business Plan?

Sections of a business plan, the bottom line.

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How to Write a Business Plan for a Loan

How to secure business financing

Matt Webber is an experienced personal finance writer, researcher, and editor. He has published widely on personal finance, marketing, and the impact of technology on contemporary arts and culture.

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A business plan is a document that explains what a company’s objectives are and how it will achieve them. It contains a road map for the company from a marketing, financial, and operational standpoint. Some business plans are more detailed than others, but they are used by all types of businesses, from large, established companies to small startups.

If you are applying for a business loan , your lender may want to see your business plan. Your plan can prove that you understand your market and your business model and that you are realistic about your goals. Even if you don’t need a business plan to apply for a loan, writing one can improve your chances of securing finance.

Key Takeaways

• Many lenders will require you to write a business plan to support your loan application.
• Though every business plan is different, there are a number of sections that appear in every business plan.
• A good business plan will define your company’s strategic priorities for the coming years and explain how you will try to achieve growth.
• Lenders will assess your plan against the “five Cs”: character, capacity, capital, conditions, and collateral.

There are many reasons why all businesses should have a business plan . A business plan can improve the way that your company operates, but a well-written plan is also invaluable for attracting investment.

On an operational level, a well-written business plan has several advantages. A good plan will explain how a company is going to develop over time and will lay out the risks and contingencies that it may encounter along the way.

A business plan can act as a valuable strategic guide, reminding executives of their long-term goals amid the chaos of day-to-day business. It also allows businesses to measure their own success—without a plan, it can be difficult to determine whether a business is moving in the right direction.

A business plan is also valuable when it comes to dealing with external organizations. Indeed, banks and venture capital firms often require a viable business plan before considering whether they’ll provide capital to new businesses.

Even if a business is well-established, lenders may want to see a solid business plan before providing financing. Lenders want to reduce their risk, so they want to see that a business has a serious and realistic plan in place to generate income and repay the loan.

Every business is different, and so is every business plan. Nevertheless, most business plans contain a number of generic sections. Common sections are: executive summary, company overview, products and services, market analysis, marketing and sales plan, operational plan, and management team. If you are applying for a loan, you should also include a funding request and financial statements.

Let’s look at each section in more detail.

Executive Summary

The executive summary is a summary of the information in the rest of your business plan, but it’s also where you can create interest in your business.

You should include basic information about your business, including what you do, where you are based, your products, and how long you’ve been in business. You can also mention what inspired you to start your business, your key successes so far, and your growth plans.

Company Overview

In this section, focus on the core strengths of your business, the problem you want to solve, and how you plan to address it.

Here, you should also mention any key advantages that your business has over your competitors, whether this is operating in a new market or a unique approach to an existing one. You should also include key statistics in this section, such as your annual turnover and number of employees.

Products and Services

In this section, provide some details of what you sell. A lender doesn’t need to know all the technical details of your products but will want to see that they are desirable.

You can also include information on how you make your products, or how you provide your services. This information will be useful to a lender if you are looking for financing to grow your business.

Market Analysis

A market analysis is a core section of your business plan. Here, you need to demonstrate that you understand the market you are operating in, and how you are different from your competitors. If you can find statistics on your market, and particularly on how it is projected to grow over the next few years, put them in this section.

Marketing and Sales Plan

Your marketing and sales plan gives details on what kind of new customers you are looking to attract, and how you are going to connect with them. This section should contain your sales goals and link these to marketing or advertising that you are planning.

If you are looking to expand into a new market, or to reach customers that you haven’t before, you should explain the risks and opportunities of doing so.

Operational Plan

This section explains the basic requirements of running your business on a day-to-day basis. Your exact requirements will vary depending on the type of business you run, but be as specific as possible.

If you need to rent office space, for example, you should include the cost in your operational plan. You should also include the cost of staff, equipment, and any raw materials required to run your business.

Management Team

The management team section is one of the most important sections in your business plan if you are applying for a loan. Your lender will want reassurance that you have a skilled, experienced, competent, and reliable senior management team in place.

Even if you have a small team, you should explain what makes each person qualified for their position. If you have a large team, you should include an organizational chart to explain how your team is structured.

Funding Request

If you are applying for a loan, you should add a funding request. This is where you explain how much money you are looking to borrow, and explain in detail how you are going to use it.

The most important part of the funding-request section is to explain how the loan you are asking for would improve the profitability of your business, and therefore allow you to repay your loan.

Financial Statements

Most lenders will also ask you to provide evidence of your business finances as part of your application. Graphs and charts are often a useful addition to this section, because they allow your lender to understand your finances at a glance.

The overall goal of providing financial statements is to show that your business is profitable and stable. Include three to five years of income statements, cash flow statements, and balance sheets. It can also be useful to provide further analysis, as well as projections of how your business will grow in the coming years.

What Do Lenders Look for in a Business Plan?

Lenders want to see that your business is stable, that you understand the market you are operating in, and that you have realistic plans for growth.

Your lender will base their decision on what are known as the “five Cs.” These are:

• Character : You can stress your good character in your executive summary, company overview, and your management team section.
• Capacity : This is, essentially, your ability to repay the loan. Your lender will look at your growth plans, your funding request, and your financial statements in order to assess this.
• Capital : This is the amount of money you already have in your business. The larger and more established your business is, the more likely you are to be approved for finance, so highlight your capital throughout your business plan.
• Conditions : Conditions refer to market conditions. In your market analysis, you should be able to prove that your business is well-positioned in relation to your target market and competitors.
• Collateral : Depending on your loan, you may be asked to provide collateral , so you should provide information on the assets you own in your operational plan.

How Long Does It Take to Write a Business Plan?

The length of time it takes to write a business plan depends on your business, but you should take your time to ensure it is thorough and correct. A business plan has advantages beyond applying for a loan, providing a strategic focus for your business.

What Should You Avoid When Writing a Business Plan?

The most common mistake that business owners make when writing a business plan is to be unrealistic about their growth potential. Your lender is likely to spot overly optimistic growth projections, so try to keep it reasonable.

Should I Hire Someone to Write a Business Plan for My Business?

You can hire someone to write a business plan for your business, but it can often be better to write it yourself. You are likely to understand your business better than an external consultant.

Writing a business plan can benefit your business, whether you are applying for a loan or not. A good business plan can help you develop strategic priorities and stick to them. It describes how you are going to grow your business, which can be valuable to lenders, who will want to see that you are able to repay a loan that you are applying for.

U.S. Small Business Administration. “ Write Your Business Plan .”

U.S. Small Business Administration. “ Market Research and Competitive Analysis .”

U.S. Small Business Administration. “ Fund Your Business .”

Navy Federal Credit Union. “ The 5 Cs of Credit .”

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How To Write A Business Plan For A Loan

A solid business plan is often critical to securing funding for your small business. Learn how to create a business plan for a loan that includes the information lenders want to see.

WRITTEN & RESEARCHED BY

Lead Staff Writer

Last updated on Updated August 18, 2024

REVIEWED BY

Editor & Senior Staff Writer

• Elements of a good business plan include an executive summary, company description, products and services, market analysis, marketing and sales plan, organizational structure, and other important information.
• Your business plan should address the "5 Cs of Credit" by demonstrating your business's financial health, investment, repayment ability, market conditions, and available assets.
• To improve loan approval chances, avoid jargon, show clear cash flow projections, document personal investment, seek professional help if needed, and be willing to revise your plan

A business plan is a crucial business document you need to have on hand when applying for business loans. However, the mere thought of writing a business plan for a loan is intimidating to a lot of business owners.

A one-page business plan may be sufficient for certain types of small business loans (for example, online loans), but bank loans and SBA loans typically require a more in-depth business plan that delves further into your financials.

If you need to write a business plan for a loan, you’ve come to the right place. Keep reading to learn more about everything you need to include in your business plan to improve your chances for loan approval.

Table of Contents

What Is A Business Plan For A Loan?

10 key sections to include in your business plan, what do lenders look for in a business plan, business plan examples, resources for writing a business plan for a loan, final thoughts on writing a business plan for a loan.

A business plan is a written document that provides a complete overview of your business, including information about your business’s services, strategies, finances, and goals. All businesses should have a business plan, but a business plan is especially important when applying for a business loan.

Most business plans should include some version of the following sections. Depending on your industry and other factors, such as whether you own a startup or established business, some sections could be condensed or combined. The exact verbiage for section titles can vary, as well.

For a business plan that’s longer than one page, it’s a good idea to preface these sections with a cover page and table of contents.

Executive Summary

This section is a condensed version of your entire business plan. It will likely include:

• Details of when, how, and why you started your business
• Your company mission statements
• High-level financial information about your business
• An explanation of how funding will help your business

Depending on whether you’re a startup or an established business, you may use this section to focus on your growth strategy or your past successes.

Company Description

Use this section to delve deeper into your company’s offerings, core principles, legal structure, and leadership. Your company description should also include your unique value proposition . Describe your company’s unique strengths that will ensure your success.

Products & Services

This section should detail the products and/or services your company provides. Make clear the problem that your offerings solve. Include information such as:

• Information on your raw materials and production process (if applicable)
• Profit margins
• Whether you have or plan to file patents or copyrights

Market Analysis

Use this section to demonstrate your understanding of your overall industry and the specific markets you serve, including market trends, competitors, and the demographics of your target customers. Some companies hire a consultant or agency to perform the research for the market analysis section.

Marketing & Sales Plan

Building off your market analysis, how will you market to your target customers and beat your competitors? How will you sell to them and distribute your product? What are your sales goals and projections? Provide these details in this section.

Organization & Management

Use this section to include your organizational and leadership structure, ideally including an organizational flowchart. Also include job descriptions, qualifications, and years of experience to demonstrate why your team is capable of delivering on your company goals and is worthy of investment.

Operational Strategy

This section is used to describe your day-to-day operational processes, including information about your location, facility, equipment, inventory, and daily production. If you have a service-based business, this section may focus more on your team’s daily activities and how they contribute to long-term goals.

Financial Outlook

This section should tell lenders how much you spend and how much you make in profits. Include up to five years of data if possible, including financial documents such as:

• Income statements
• Cash flow statements
• Balance sheets
• Capital expenditure budgets
• Sales forecasts
• Projected income statements
• Information on any collateral you have to secure the loan

Depending on how much financial documentation you have, you might refer to specific documents in this section and indicate that the full documents can be found in the Appendix section.

Though startups may not have all of this data, you can make projections based on monthly or quarterly data and industry averages.

Funding Request

Now that you’ve laid out your expenses and financial projections, it’s time to make your case for a loan. Be clear about how much money you need, how you will spend it, and how you will repay the loan. Be as detailed as possible.

In the Appendix, include any supporting documents, such as financial documents referred to in the Financial Outlook section. Some other types of documents you might include in this section are:

• Business licenses  or permits
• Credit reports
• Product photos
• Marketing materials
• Letter of intent to purchase business

If you know what lenders are looking for in a business plan for a loan, you will increase your chances of approval. Learn the five things lenders want to see in your business plan, followed by five tips to create a loan-worthy business plan.

The 5 Cs Of Credit

The Five Cs of Credit is a phrase that summarizes what lenders look for when deciding whether to extend a loan to a business. Lenders will, accordingly, look for the five Cs when reviewing the business plan in your loan application. The five Cs are:

• Character: Your knowledge, experience, and creditworthiness
• Capacity: Your ability to repay the loan
• Capital: How much you have already invested in your business
• Conditions: Your market viability, considering your industry as well as overall economic conditions
• Collateral: Assets you can use to secure the loan

5 Business Plan Tips For Loan Approval

Besides emphasizing your “5 Cs,” there are a few other things you can do to make the best impression with your business plan to increase your chances of securing funding.

• Avoid Industry Jargon: Use plain English rather than industry terminology that the lender might not be familiar with. Remember that the loan underwriter may not have deep knowledge of your specific industry.
• Show Cash Flow: Cash flow is one of the most important factors that determine loan eligibility. You can even get a loan with bad credit as long as your cash flow is sufficiently high. The more insight you can provide into your past, current, and future cash flow, the better.
• Show Your Investment: Before extending a loan, the lender will want to see that you have already invested some of your own resources, such as personal savings, into your business. Be sure to include documentation that demonstrates your investment.
• Enlist Help: You will likely need some professional assistance in creating your business plan, whether that means hiring a writer, an industry consultant, or both. At the very least, you should have a third party review your business plan before you submit it as part of a loan application.
• Revise Your Plan As Needed: If this is the first time you’ve taken a close look at your business strategy and financials, you will surely learn some things about your business while creating your plan. For example, you may realize you cannot afford a business loan as large as you planned to ask for. Rather than trying to justify the number you started with, it’s better to modify your funding request (and other aspects of your plan) to align with your financial reality.

It’s easy to find templates and examples of business plans online. Though you may not want to copy and paste from a template verbatim, these samples provide a starting point and show you different ways a business plan can be structured. Here are a few to start with:

• Business plan template for a startup (from SCORE)
• Business plan template for traditional businesses  (from the SBA)
• Business plan template for retail or eCommerce (from Shopify; requires email address)

These tools and resources can help you create a solid business plan for a loan. While some free business plan creation tools are available online, you will have to pay for some options.

SBA Business Plan Resources (Free)

The SBA has a great resource in its online learning center that includes business plan worksheets . In addition to business plan templates, the SBA also helps you connect to free local business counselors who may be able to help you with your business plan.

Business Plan Software ($)

If you need extra help creating a business plan and don’t mind spending a little bit of money, consider business plan creation software. For example, LivePlan ($20/month) is business plan software that connects with QuickBooks to import your financial data to your plan.

Business Plan Writer/Consultant ($$$)

If you’re willing to invest more heavily into your business plan, consider hiring a writer or consultant that specializes in creating business plans. This option costs anywhere from $2,000 to $20,000, with the lower end of that scale typically including only basic writing services and the higher end representing a specialized industry consultant agency.

While it’s helpful to know how to write a business plan for a loan, you can always hire someone to help you draft the plan if the task is too daunting. A business plan is a worthwhile investment no matter what type of business you have or whether you are currently trying to secure business funding. Even if you don’t need a loan right now, it’s important to maintain an updated business plan to serve as a guide for your own business decisions.

Was your loan denied because of your business plan (or another reason)? Learn what to do if your business loan was denied .

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• Mar 30, 2023

The Ultimate Guide to Writing a Business Plan for a Loan: A Step-by-Step Walk-Through

The Ultimate Guide to Writing a Business Plan for a Loan: A Step-by-Step Walkthrough

As a business plan specialist and expert business planner, I'm here to guide you through the process of writing a comprehensive business plan for securing a loan. Whether you're a start-up or an established business looking to expand, a well-crafted business plan is essential for impressing potential lenders and securing the funding you need.

In this extensive, 5,000-word article, I'll cover everything you need to know about creating a top-notch business plan that will boost your chances of loan approval. We'll go through each section in detail, providing you with practical examples and tips to optimize your plan for success. So, let's get started!

Executive Summary

The executive summary is the first and most critical section of your business plan. It's a brief overview of your entire plan, highlighting the key points and giving readers an insight into your business.

Key elements to include in your executive summary:

Business concept: Briefly explain your business idea, the products or services you plan to offer, and the target market.

Company overview: Provide essential information about your company, including its legal structure, location, and mission statement.

Management team: Showcase the expertise and experience of your management team, emphasizing their ability to lead the business.

Market opportunity: Describe the market demand, trends, and target audience, highlighting the opportunity for your business to succeed.

Financial highlights: Summarize your financial projections, including sales, profits, and cash flow.

Loan purpose: Clearly state the purpose of the loan and the amount you're seeking.

Remember, the executive summary is often the first thing lenders read, so make it engaging and informative to grab their attention.

Company Description

The company description section is where you provide a more in-depth look at your business. It should give readers a clear understanding of your company's purpose, goals, and competitive advantages.

Key elements to include in your company description:

Business history: If your company has an existing history, briefly describe its origins and milestones achieved.

Mission statement: Articulate the purpose of your company and the value you aim to provide to customers.

Objectives: Outline the specific goals you want to achieve with your business, both short-term and long-term.

Products and services: Provide a detailed description of the products or services you plan to offer, emphasizing the benefits they provide to customers.

Target market: Identify your target audience, specifying their demographics, psychographics, and buying habits.

Competitive advantage: Explain what sets your business apart from the competition and how you plan to maintain this edge.

Market Analysis

The market analysis section demonstrates your understanding of the industry, market, and competition. It's crucial to show lenders that you've done your homework and have a comprehensive understanding of the market landscape.

Key elements to include in your market analysis:

Industry overview: Provide a high-level view of your industry, including its size, growth trends, and key players.

Market segmentation: Break down your target market into smaller segments, identifying their unique needs and preferences.

Target market characteristics: Describe the specific characteristics of your target market, such as demographics, psychographics, and geographic location.

Market demand: Present evidence of market demand, using data on customer needs, market trends, and buying behaviors.

Competitor analysis: Evaluate your main competitors, analyzing their strengths, weaknesses, and market share.

SWOT analysis: Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to assess your business's position in the market.

Marketing and Sales Strategy

In this section, outline your marketing and sales strategy to show lenders how you plan to attract and retain customers, as well as generate revenue. A well-defined marketing and sales strategy is crucial to demonstrate that you have a clear plan for growth and profitability.

Key elements to include in your marketing and sales strategy:

Marketing objectives: Define your marketing goals, such as brand awareness, lead generation, or customer retention.

Target audience: Reiterate your target market, emphasizing their needs and preferences.

Unique selling proposition (USP): Highlight your USP, the main reason customers should choose your products or services over the competition.

Marketing channels: Identify the marketing channels you plan to use, such as social media, email, content marketing, or paid advertising. Explain the rationale behind your choice of channels and how they align with your target audience.

Sales process: Describe your sales process, from lead generation to closing deals. Include details on your sales team structure, training, and compensation plans.

Key performance indicators (KPIs): List the KPIs you'll use to measure the success of your marketing and sales efforts, such as conversion rates, average deal size, or customer lifetime value.

Operations Plan

The operations plan section details the day-to-day activities required to run your business. It shows lenders that you have a clear understanding of the operational aspects of your company and the resources needed to support your growth.

Key elements to include in your operations plan:

Facilities: Describe your business's physical location, including its size, layout, and any equipment or machinery required.

Production process: If applicable, detail your production process, including the steps involved, quality control measures, and production capacity.

Supply chain: Outline your supply chain, identifying key suppliers, procurement processes, and inventory management practices.

Staffing: Explain your staffing requirements, including the roles, responsibilities, and qualifications of each team member.

Management structure: Provide an organizational chart, showcasing your company's management structure and reporting lines.

Legal and regulatory requirements: Identify any relevant legal or regulatory requirements, such as licenses, permits, or certifications needed to operate your business.

Financial Plan

The financial plan is arguably the most crucial section of your business plan when applying for a loan. It demonstrates your ability to manage finances, make informed decisions, and, ultimately, repay the loan.

Key elements to include in your financial plan:

Revenue projections: Estimate your future sales, breaking them down by product or service category and showing growth rates over time.

Expense projections: Forecast your expenses, including fixed costs (e.g., rent, utilities) and variable costs (e.g., marketing, salaries).

Cash flow statement: Provide a detailed cash flow statement, showing how cash will flow in and out of your business over a specified period (typically 12 months).

Profit and loss statement: Create a profit and loss statement that projects your business's profitability over time.

Balance sheet: Prepare a balance sheet that showcases your business's assets, liabilities, and equity.

Break-even analysis: Calculate the point at which your business will break even, meaning your revenues equal your expenses.

Loan repayment schedule: Detail your proposed loan repayment schedule, including the loan amount, interest rate, repayment terms, and projected date of full repayment.

The appendices section is where you can include any additional documents or supporting materials that are relevant to your business plan. These documents may provide further evidence of your company's viability and help strengthen your case for securing a loan.

Examples of items to include in the appendices:

Resumes of key team members

Product samples or prototypes

Market research data or surveys

Letters of intent or contracts with suppliers, partners, or customers

Intellectual property documentation, such as patents, trademarks, or copyrights

Relevant licenses, permits, or certifications

Writing a comprehensive business plan for a loan can seem like a daunting task, but with the right approach and guidance, it's an achievable goal. By following the step-by-step instructions outlined in this article, you can create a well-structured, persuasive business plan that will greatly improve your chances of securing the funding you need. Remember to:

Pay close attention to your executive summary, as it sets the tone for the entire plan.

Be thorough and detailed in your market analysis, showing a deep understanding of your industry and target audience.

Develop a solid marketing and sales strategy to demonstrate your ability to attract and retain customers.

Address the operational aspects of your business, including staffing, facilities, and supply chain management.

Present a robust financial plan, complete with projections and a loan repayment schedule.

By doing so, you'll showcase your expertise, commitment, and preparedness to potential lenders, significantly increasing the likelihood of obtaining the loan your business needs to grow and succeed.

In addition to following the steps outlined in this guide, consider seeking professional assistance from a business plan consultant or specialist to review and refine your plan. Their expertise can help you identify any areas that may need improvement and ensure that your business plan is optimized for success.

Finally, remember to continuously update your business plan as your business evolves. Regular updates will ensure that your plan remains relevant and accurate, providing you with a valuable roadmap for your business's future growth and development.

With dedication, persistence, and a well-crafted business plan, you can secure the funding you need to bring your business vision to life. Good luck, and here's to your success!

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• Funding Your Business

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How to Write a Business Plan For a Loan

Securing a business loan is a critical step for many entrepreneurs aiming to start or expand their operations. Lenders and investors require a business plan before they will consider financing a business. A well-written business plan can improve your chances of getting funding and give you a competitive edge in a sea of entrepreneurs. 

In this guide, we will explore the steps involved in crafting an effective business plan tailored to secure a loan, offering essential tools, resources, and practical examples to help you succeed.

What is a Loan Business Plan?

A loan business plan is a comprehensive document that details your business’s objectives, strategies, financial health, and future projections. This type of business plan differs from others in that it specifically caters to the interests of financial lenders. 

Key elements such as profitability forecasts, risk management, and financial stability are emphasized to assure lenders of your ability to manage and repay the loan. Essentially, this plan serves as both a roadmap for your business’s future and a persuasive tool for securing financial backing.

Do You Need a Business Plan to Get a Loan?

Whether or not you need a business plan for financing depends on several factors, including the type of loan, the lender, and the amount of money you’re requesting. However, in many cases, having a well-prepared business plan is essential, particularly for small businesses and startups seeking significant funding. Here’s a closer look at when and why writing a business plan for a loan may be required for securing financing.

Importance of a Business Plan in Securing a Loan

Risk Assessment: Lenders use business plans to assess the risk involved in lending to a business. A comprehensive business plan to get a loan provides a detailed overview of your business’s structure, strategy, market, and financial health, which helps lenders make informed decisions.

Demonstrating Commitment and Preparation: A business plan for bank loan shows that you have put significant thought and effort into planning your business. This commitment is often viewed favorably by lenders, as it suggests that you are serious about your business’s success and are likely to be diligent in repaying the loan.

Clarifying Loan Utilization: Lenders require business owners to identify the purpose of the loan. A business plan that clearly outlines how the loan will be utilized (for expansion, equipment, inventory, etc.) can help assure lenders that the funds will be used responsibly and will contribute to the business’s growth.

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Essential Components of a Loan Business Plan

To effectively communicate your business’s potential and stability to lenders, it’s crucial to know how to make a business plan for a loan. Your business plan should include the following critical components:

Executive Summary

The executive summary acts as the introduction in creating business plan for a loan, providing a concise overview of the most important aspects. It should include your business name, location, a brief description of your business operations, and your mission statement. Crucially, this section should also detail the loan amount you are requesting and its purpose. This part sets the stage for the detailed explanation that follows in the rest of the document.

Company Description

In this section, dive into what your business does, the market needs it meets, and the customers it serves. Include details about your company’s legal structure, ownership, significant achievements, and the competitive edge your business possesses. This background information is essential to establishing the context for your business plan funding request.

Market Analysis

Conducting a thorough market analysis is a key component of business loan analysis. It shows lenders your deep understanding of the industry and your business’s positioning. Include details like demographic and psychographic data, market size, expected growth, and how your offerings meet market needs. Additionally, a competitive analysis of your rivals’ strengths and weaknesses highlights your business’s advantages in the marketplace.

Organization and Management

This section should outline your business’s organizational structure and introduce your management team, detailing their roles, backgrounds, and unique qualifications. Demonstrating the strength and expertise of your management team can reassure lenders that your business is under competent leadership.

Service or Product Line

Describe in detail the products or services your business offers. Explain how these offerings are produced, their benefits to customers, and their life cycle. Discuss any new products or services you plan to introduce and how they will contribute to your business’s growth.

Marketing and Sales Strategy

Articulate your strategies for attracting and retaining customers. This section should detail your marketing plans, sales tactics, and the channels you intend to use to reach your target audience. Clearly outlining how you will generate customer demand and convert it into sales is crucial for convincing lenders of your business’s revenue potential.

Funding Request

In your funding request, clearly state the amount you need and provide a brief explanation of why you are asking for the loan and what you plan to do with the money. Specify the type of loan you are seeking, the desired terms, and your preferred repayment plan. This detail helps lenders assess the feasibility of your request and understand how the funds will be used, enhancing the transparency and credibility of your business plan.

Financial Projections

Provide comprehensive financial projections to support your business plan funding request. Describe how you plan to use these funds, including projected income statements, balance sheets, cash flow statements, and capital expenditure budgets for the next three to five years. Ensure these projections are realistic and data-driven to demonstrate your business’s ability to repay the loan effectively.

What Lenders Look for in a Business Plan?

When writing a business proposal for funding, it’s crucial to understand the criteria lenders use to evaluate your application. Often referred to as the “Five Cs of Credit,” these criteria help lenders assess the risk associated with your business and determine your ability to repay the loan. Addressing each of these factors thoroughly in your bank loan proposal can greatly improve your chances of securing funding.

Character refers to the trustworthiness and reliability of the business owner and management team. Lenders assess character by looking at your personal credit history, industry experience, and references. This aspect of your business plan should highlight your professional background, achievements, and the expertise of your management team, underscoring your commitment to the business’s success.

Capacity is your business’s ability to repay the loan, which is primarily evaluated through your cash flow. Lenders will examine your past financial statements and your projected financials to ensure that your business generates enough cash flow to cover your existing expenses plus the new loan payments. This section should include detailed, realistic financial forecasts and a solid explanation of how these projections align with your business’s operational plans.

Capital pertains to the money you have invested in your business. Lenders want to see that you have skin in the game. The more of your own money that is invested in the business, the less likely you are to walk away from it. Include information about your personal investment and the equity within the business. This demonstrates your commitment to the business and reduces the risk for the lender.

Conditions refer to both the internal and external factors that might affect your business. Internally, this could include your business’s organization, product line, and marketing strategy. Externally, it encompasses market conditions, industry trends, and the economic environment. Your business plan should discuss how these conditions impact your business and what steps you will take to mitigate risks associated with unfavorable conditions.

Collateral is any asset that you can offer to secure the loan, which the lender can seize if you fail to repay the debt. While not all business loans require collateral, providing it can help secure better terms or a larger loan amount. Detail any assets that could serve as collateral in your business plan, including real estate, equipment, or inventory.

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How to Present a Business Plan to a Bank?

Presentation is key when approaching a bank with your business plan for loan application. Prepare thoroughly, understanding every detail of your plan and being ready to answer in-depth questions. Present your business loan proposal neatly and professionally, and maintain a confident, concise delivery. This professionalism shows that you are serious and well-prepared, which can be just as important as the content of your business plan.

Tools and Resources for Crafting a Business Plan

Creating a compelling bank loan business plan is essential, especially when applying for startup loans or presenting to a lender. To streamline the process and enhance the quality of your business plan, consider leveraging the following tools and resources:

Software Solutions

Software solutions like LivePlan , Bizplan , and Enloop are designed to simplify the process of creating a detailed business plan. These tools offer:

• Guided Instructions: Step-by-step guides that help you build each section of your business plan, ensuring all critical elements are covered.
• Financial Projections Tools: Automated tools to help calculate financial forecasts, which are crucial for start up loans and bank loans.
• Customizable Templates: Specific templates that can be tailored to the needs of different industries and funding scenarios, such as a business plan for a bank loan example or a startup loan application.

These software options are especially beneficial for those who are new to writing business plans, as they help draft a business plan, structure your thoughts, and ensure your document meets lender expectations.

Websites like SCORE , GrowThink and Bplans provide a wealth of free resources that can be particularly useful when crafting your business plan for loan:

• Sample Business Plan For Bank Loan PDF : This PDF is designed to cater to the unique requirements of different sectors, providing a solid starting point that you can adapt to your specific business scenario.
• Business Plan for Bank Loan Example: Access to sample business plans that succeeded in securing bank loans can give you insights into what banks are particularly attentive to.
• Business Plan Template for Bank Loan: Specific templates designed to meet the criteria and expectations of banks, which can be incredibly helpful in structuring your document properly.

Utilizing these templates can save time and ensure your plan aligns with industry standards, enhancing your credibility with potential lenders.

Professional Consultants

For those who prefer a more personalized approach or need expert advice, hiring a professional business plan writer or consultant can be a wise investment:

• Tailored Expertise: Consultants bring specific knowledge of what lenders look for in a business plan, especially important when applying for startup loans where there is no business history to leverage.
• Critical Review and Feedback: An experienced consultant can provide critical feedback, helping refine your plan’s messaging to ensure it resonates with bank officers and loan committees.
• Industry Insights: Consultants often bring deep industry insights that can enrich your market analysis and competitive landscape sections, strengthening the overall persuasive power of your business plan for a bank loan. 

Whether you’re drafting your first funding business plan or refining one for a crucial bank loan, these tools and resources can dramatically increase your efficiency and effectiveness. By carefully selecting the right aids, you ensure your business plan is not only comprehensive but also compelling enough to secure the needed funding.

A well-crafted business plan is crucial for securing a business loan. It not only demonstrates your commitment and understanding of the market but also reassures lenders of your ability to manage financial responsibilities. Incorporating essential components like a detailed executive summary, comprehensive market analysis, and robust financial projections, alongside addressing the “Five Cs of Credit,” significantly strengthens your loan application.

Presenting your business plan with confidence and professionalism is equally important. Leveraging tools such as business plan software, templates, or engaging professional consultants can enhance your plan’s effectiveness. With thorough preparation and a strategic approach, you can increase your chances of obtaining the necessary funding to advance your business goals.

Crafting Winning Business Plans for Your Loan Success

To enhance your prospects of successfully securing a business loan , consider utilizing the professional business plan services offered by BSBCON . Our skilled consultants are adept at asking the right questions to ensure that the information collected from you is consistently represented throughout your plan. We conduct thorough external research to substantiate your assumptions and financial projections. 

Our team is committed to ensuring that your business plan for funding adheres to all the criteria set forth by banks. Moreover, we deliver your tailored business plan in a professional and visually appealing format, reinforcing the strong and successful image you wish to portray for your business.

For a detailed quote on a professionally crafted, winning business plan that can help you secure your bank loan, contact us today.

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• Business Loans

How To Get A Business Loan In 5 Steps

Updated: Aug 29, 2024, 12:22pm

A business loan can provide the funds you need to expand operations, cover day-to-day expenses and purchase equipment or inventory. If you’ve never applied for a business loan, you might be unsure about where to begin or which documents are required.

Here’s a simple guide that walks you through the process of evaluating your options and preparing your business loan application in five easy steps.

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1. Decide Why You Need Financing

There’s more than one kind of small business loan. Deciding why you need financing will help you choose the right kind of loan. Here are a few common scenarios:

• Buy new equipment Some lenders offer equipment loans . This type of loan is designed to help you purchase business equipment, like machinery or office furniture. The loan is secured by the equipment, so the lender can seize it if you fail to repay the loan.
• Borrow a small amount of money. If you need to borrow a small amount of money, consider applying for a microloan. The U.S. Small Business Administration (SBA) has a Microloan program that allows qualified applicants to borrow up to $50,000. In addition, there are not-for-profit organizations that offer microloans, such as Kiva and the Women’s Microfinance Initiative.
• Establish a business. Since most lenders have minimum time in business requirements, it can be tough to find one that will issue you a startup loan for a new business . If you’re just starting out, you may have to apply for a microloan or a business credit card . You may find it easier to qualify for a business credit card than other types of business loans since approval is based on your personal credit score.
• Pay for day-to-day operations. A working capital loan —a short-term loan used to cover daily expenses, like rent and payroll—can help you cover temporary cash flow problems.
• Borrow money on an as-needed basis. If you don’t know the exact amount you need to borrow, a business line of credit could be a good option. Once a lender issues you a line of credit, you can withdraw funds up to a certain amount to cover business expenses and only pay interest on the amount you borrow.

Funding Turnaround Time

As you consider different types of financing for your business, consider how quickly you need to receive your funding. Each loan option will have different turnaround times once you submit an application, and if you need your funding quickly, some options may be better than others.

Many loans, including loans from banks and credit unions, can take 30 or more days to be funded. Yet, this can vary based on the lender and your application, including if any asset backing the loan needs to be assessed.

If you need a quick turnaround time for funding, some SBA loans can be funded within 10 days, and there are online lenders that offer fast business loans . These loans, which include both traditional loans and equipment loans, can be funded within a day in some cases.

2. Check Your Eligibility

Although business loan requirements vary, here are four things lenders are likely to consider when reviewing your small business loan application:

• Credit score. When you apply for a business loan, a lender will review your personal and business credit scores . They help the lender assess the likelihood you’ll repay your loan. In general, the higher your credit score, the greater your chances of loan approval and receiving a low interest rate.
• Collateral and/or personal guarantee. Some lenders require you to pledge collateral —something of value, such as equipment or inventory—it can seize if you default on the loan. Some lenders may also require a personal guarantee, meaning you have to secure the loan with personal assets, such as your savings, home or other valuable possessions.
• Time in business. A traditional bank typically requires a business to have been in operation for at least two years, while an online lender usually requires only one year. If you’ve been operating your business for less than one year, don’t get discouraged. Some online lenders will approve qualified applicants who have only been in business for six months.
• Annual revenue. Your total annual sales are also a relevant factor. Before applying, ask a lender what the requirements are and review your business finances to see if you meet them.

3. Compare Business Lending Options

There are several places you can find small business loans. Here are four of the most common types of lenders.

Online Lenders

Online lenders offer a variety of loan products to small business owners, including term loans, merchant cash advances, lines of credit and microloans. Loan approval rates were lower for online lenders than traditional banks as of 2022—71% versus 82%, respectively—according to the 2023 Small Business Credit Survey (SBCS) by the Federal Reserve.

Nonetheless, online lenders often have less stringent requirements than traditional banks. As a result, you may find it easier to get approved for a business loan with an online lender if you have less-than-stellar credit. In addition, online lenders often have much faster turnover—some may issue funds as soon as the same business day.

A major downside of taking out a business loan with an online lender, however, is that it often charges higher interest rates than a traditional bank.

Related:  Average Business Loan Rates: What Will You Be Charged?

Traditional Banks

Traditional banks provide many of the same types of business loans as online lenders. The main advantage of applying for a small business loan with a bank versus an online lender or microlender is that it typically offers lower rates for well-qualified applicants.

One disadvantage of applying for a business loan with a bank is that it often has more stringent eligibility requirements. If you have a bad personal credit score (a FICO score less than 580), you will likely have a hard time qualifying without a co-signer—someone who agrees to repay the loan if you fail to meet your payment obligations.

If you opt for funding from a bank, a small bank may be a better option versus a larger one. A majority of borrowers were satisfied with their experience and few were frustrated by long wait times, according to the 2023 SBCS survey. Fewer borrowers who worked with large banks were satisfied with their experience and more were frustrated by long waits for funding.

Microlenders

Microlenders are typically not-for-profit organizations that issue microloans up to $50,000 to qualified applicants, often designed to provide financing for business owners who don’t qualify for traditional business loans. Microlenders usually have less stringent eligibility requirements.

For example, the microlender Kiva does not have a minimum credit score requirement. Instead, it approves applicants based on “social capital.” To qualify, you have to get a certain number of people to lend money to you through Kiva’s platform before your loan request becomes public on their website.

SBA Lenders

Many lenders offer SBA loans , which the Small Business Administration guarantees. SBA loans have maximum loan amounts of up to $5 million and terms up to 25 years, depending on the loan type and use.

Qualification requirements can vary, but generally, your business must be for-profit, do business in the U.S. and be creditworthy. For businesses that qualify, SBA loans can have competitive interest rates, low fees and high loan amounts.

The most common types of SBA loans include:

• SBA 7(a) loans: 7(a) loans are intended for small businesses to cover business-related expenses, including working capital, buying equipment, acquiring real estate, among other uses. There are multiple types of SBA 7(a) loans , with maximum loan amounts of $5 million with terms up to 25 years. These loans are most often available through banks and other financial institutions.
• SBA 504 loans: The SBA’s 504 loans offer funding for major assets that grow your business and headcount, including building or buying buildings and purchasing long-term equipment. These loans are available through certified development companies (CDCs), with terms as long as 25 years.
• Microloans: Microloans offer businesses up to $50,000 to cover the cost of launching and expanding. These loans are available through nonprofit organizations, and the maximum repayment terms are six years.

Your business can find a lender for an SBA loan using the SBA’s Lender Match  tool.

Comparing Offers

As you shop for loans from various lenders, use a business loan calculator to calculate the costs of each loan. This can help you find the lowest cost financing option.

4. Gather the Required Documents

Once you understand your lending options, gather the required documents. A lender will likely ask for these items:

• Personal and business tax returns
• Business licenses
• Articles of incorporation
• Personal and business bank statements
• Profit and loss statements
• Financial statements
• Business plan
• Building lease

If you’re unsure what documents are needed, contact the lender before applying.

Loan amounts

$500 to $5 million

As low as 3%

Minimum credit score

Eligibility

• Minimum Credit Score: 560
• Time in Business: Six Months
• Minimum Annual Revenue: $50,000

Funding time

Applying through Lendio takes 15 minutes. After you review your offers and are approved by your lender, you can receive your funds in as little as 24 hours.

5. Submit Your Application

The final step is to submit your small business loan application. Depending on what lender you’ve decided to work with, you can do this online or in person.

Here’s some information a lender might ask for:

• Business name
• Social Security number (SSN)
• Desired loan amount
• Loan purpose
• Business Tax ID
• Annual revenue

Once you submit your application, you’ll have to wait for an approval decision. If your loan is approved, a lender will send you a loan agreement to sign before issuing your funds or a line of credit you can draw from.

Types of Business Loans

Depending on your business’s needs, one loan type may work better than another. Before accepting any financing, consider various business loans so that your business is best served by the loan.

• SBA loans. SBA loans are small business loans guaranteed by the Small Business Administration. These loans include SBA 7(a) loans, 504 loans, CAPlines, Microloans and others, each of which serve different purposes. SBA loans often come with lower interest rates and down payments than other options, but you’ll often need to be an established business to qualify.
• Term loans. Term loans are traditional installment loans that are repaid over predetermined terms. Banks, credit unions and online lenders all offer these loans and while some have limited uses, many can be used for most business-related expenses. They’re typically available up to $500,000 with APRs starting around 9%.
• Lines of credit. A business line of credit is a form of financing that your business can draw from on an as-needed basis, making it a good option for ongoing cash flow issues. The borrower has access to the line of credit for a set period of time up to a predetermined limit. Once that draw period is over, the borrower has to repay the loan, with interest. APRs are typically anywhere between 10% and 99%.
• Invoice factoring and financing. With invoice factoring , your business sells outstanding invoices to a factoring company at a discount. This can be an effective way to get paid for outstanding invoices quickly, rather than waiting for customers to pay. APRs for invoice factoring are typically between 10% and 79%.
• Merchant cash advance. A merchant cash advance works by giving a lender a portion of your future sales, making this a good option for businesses that have a high volume of sales and need cash quickly. A lender will lend your business money and then that money will be repaid with a percentage of your sales on a daily or weekly basis.
• Equipment financing. Equipment financing funds the purchase of equipment or machinery, with the purchased equipment backing the loan. These loans can be used for anything from office furniture to manufacturing equipment, and terms can be as long as 25 years with limits of up to $1 million.

How To Get Approved for a Business Loan

Business loan eligibility requirements vary by lender, but in general, you and your business must meet these qualifications to get a business loan:

• Credit score. Most lenders will require a personal credit score of at least 670. If your business has been in operation for at least two years, many lenders will also have business credit score requirements.
• Time in business. Lenders will often require your business to have been in operation for at least six months to two years.
• Business revenue. To qualify for a business loan, your business will need $100,000 to $250,000 in annual business revenue.

How To Choose the Right Business Loan for You

Choosing the best business loan comes down to comparing loans you qualify for and determining which loan is the right fit. Here are loan factors to weigh across many loans.

• Annual percentage rate (APR). A loan’s APR represents what a loan costs on an annualized basis, including interest and fees. Comparing APRs can give you an apples-to-apples idea of which business loans will be the most and least affordable.
• Fees. Lenders may charge upfront fees to process your loan application. Projecting these fees and factoring them into the equation can also help you compare costs.
• Repayment terms. Terms for business loans can range from one year to 25 years. Choosing a long loan term can decrease your monthly payments but increases how much interest you’ll pay over time. The right loan term for you depends on your goals and what installment payments you can afford.
• Funding speed. While business loans from major banks might provide competitive rates for borrowers with strong credit, the application process can be cumbersome. If funding speed is a high priority, online lenders may offer faster funding.

Frequently Asked Questions (FAQs)

How hard is it to get a business loan.

It can be difficult to get a business loan, but qualification requirements vary by lender. To find a lender where your business is eligible for a loan, consider shopping around for lenders and prequalifying where possible.

What credit score is needed for a business loan?

Since lenders have different eligibility requirements, the personal credit score you need to qualify for a business loan varies. That said, minimum credit score requirements may range from 500 to 680.

The business credit score needed to qualify also varies from lender to lender. Plus, it depends on the type of loan you’re applying for and what business credit score a lender uses. For example, when it comes to SBA loans, you’ll typically need a minimum business credit score of 155 to pass the SBA’s pre-screen process. However, most lenders set their minimum score requirements between 160 and 165.

How can I get a business loan with no money?

Although most lenders have annual revenue requirements, it’s possible to get a business loan if your business doesn’t have any money. Some lenders offer no doc business loans—loans that don’t require verification of business income. To qualify, you’ll likely need to have excellent credit and provide a personal guarantee.

Can I get a business loan with bad credit?

Although you’ll likely find it tougher to get approved for a small business loan with bad credit , it’s possible. Some lenders specialize in offering business loans to borrowers who have bad personal credit scores . However, If approved, a lender will most likely charge you a higher interest rate.

To receive a lower interest rate and boost your approval odds, consider applying with a co-signer who has a good credit score (at least 670, according to FICO) and decent income, if possible. A co-signer is someone who agrees to repay your loan if you default. Before you ask someone to co-sign for you, make sure they understand that a missed payment can cause damage to their credit.

How can I get approved for a business loan without collateral?

Certain lenders may be willing to approve you for a business loan without collateral if you sign a personal guarantee. Providing a personal guarantee means that you legally agree to be personally responsible for paying back the loan with your own assets or savings if the business cannot.

Since eligibility conditions vary by lender, shopping around can help you find a loan with application criteria that fits your situation. You may have the best shot at qualifying for a no-collateral loan through an online lender that has flexible application requirements.

How can I get a business loan from a bank?

The process for taking out a business loan from a bank can vary by financial institution. Some major banks have online applications where you input information about yourself and your business to apply. In other cases, you’ll have to visit a branch to apply.

Information you must provide to start an application could include your business name, the date you started the business, gross annual revenue and annual household income for all owners. Brick-and-mortar banks tend to have more stringent eligibility requirements compared to online lenders; having strong credit and financials may be necessary to qualify.

Looking for a business loan?

Get Forbes Advisor’s ratings of the best lending platforms and helpful information on how to find the best loan based on your credit score.

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Jerry Brown is a personal finance writer based in Baton Rouge, La. He's been writing about personal finance for three years. Financial products he enjoys covering include credit cards, personal loans, and mortgages.

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How To Create a Business Plan for a Bank Loan [4 Key Steps]

Posted august 9, 2024 by kody wirth.

Wondering how to create a business plan that will wow your banker?

You’re not alone.

Aside from your loan application, your business plan is the main supporting document to help you get a business loan . Getting all the details just right is absolutely essential.

So here’s what we recommend: simplify the planning process by breaking the work up into manageable, bite–sized steps. That way, you can focus on one section at a time to ensure that your business plan is accurate and convincing.

Here’s a quick overview of the step–by–step process we guide entrepreneurs through when they sign up for LivePlan.

1. Outline the opportunity

This is the core of your business plan. It should give loan officers a clear understanding of:

• What problem you’re solving
• How your product or service fits into the current market
• What sets your business apart from the competition

There are three key parts to this step:

The problem and your solution

Detail exactly what problem you are solving for your customers. How do their lives improve after you solve that “pain point” for them?

Be sure to describe your solution in vivid detail. For example, if the problem is that parking downtown is expensive and hard to find, your solution might be a bike rental service with designated pickup and dropoff locations.

If you’re just starting, we recommend actually going out and talking with your customers first. That way, you can prove you’re solving a real problem for your intended audience.

Target market

Who exactly are you selling to? And roughly how many of them are there?

This is crucial information for determining whether or not your business will succeed long–term. Never assume that your target market is “everyone.” You need to break down the total market into a realistic number of sales based on your business’s capabilities.

For example, it would be easy for a barber shop to target everyone who needs a haircut. But most likely, it will need to focus on a specific market segment to reach its full business potential. This might include catering to children and families, seniors, or business professionals.

Competition

Who are your direct competitors ? These are companies that provide similar solutions that aim to solve your customers’ pain points.

Then outline what your competitive advantages are. Why should your target market choose you over other products or services?

Do you think you have no competition? Think again. Your customers are likely turning to an indirect competitor who is solving their problem with a different type of solution.

For example, a taco stand might compete directly with another taco stand but indirectly with a nearby hot dog vendor.

2. Show how you’ll execute

This is where the action happens! 

Here you’ll get into the details of how you’ll take advantage of the opportunity you outlined in the previous section. This part demonstrates to banks that you have a strong plan to achieve success.

The three main components of this step include:

Marketing and sales plan

There can be a lot of moving parts to this one, depending on your business model.

But most importantly, you’ll need to fully explain how you plan to reach your target market and convert those people into customers. 

Here are a few examples of what to include:

• Positioning strategy: What makes your business both unique and highly desirable to your target market?
• Marketing activities: Will you advertise with billboards, online ads or something else entirely?
• Pricing: The price you charge must reflect consumer demand. There are several pricing models to choose from, including ‘cost–plus pricing’ and ‘value pricing.’

This is the nuts and bolts of your business. It’s especially important for brick–and–mortar companies that operate a storefront or have a warehouse. You may want to explain why your location is important or how much space you have available. 

Plan to work at home? You can also cover your office space, how this positively impacts your expenses, and if you have any plans to move outside your house.

If you use any specialized software, equipment, or tools be sure to mention them here as well.

Milestones and metrics

Lenders and investors want to be confident that you know how to turn your business plans into financial success. That’s where your milestones come in.

These are planned goals that help you progress your company. For example, if you’re launching a new product your milestones may include completing prototypes and figuring out manufacturing.

Metrics are how you will gauge the success of your business. 

Do you want to generate a certain level of sales? Or keep costs at a certain level? Figuring out which metrics are most important and then tracking them is essential for growth.

3. Detail your financial plan

This is the most crucial – and intimidating – part of any business plan for a bank loan. 

Your prospective lender will look especially close at your financial performance and financial forecasts to determine how likely your business is to succeed.

Ideally, you’re already tracking your finances and have at least dabbled with forecasting. However, if you’re starting from scratch, break your financial planning into the following smaller pieces:

Simply put, these are your projections for your business finances. It gives you (and the bank) an idea of how much profit your company stands to make. Just a few items you’ll need to include:

• Sales forecast : List all your products, services, and any other ways your business will generate revenue. If you have direct costs, or expenses required to make what you sell, consider adding them as a percentage of your revenue.
• Personnel forecast : Salaries and expenses related to what you pay yourself, employees, and any contractors.
• Expense forecast : Things like rent, utilities, marketing costs, and any other regular expenses.

How much and how will you use any investments, loans, or other financing to grow your business? This might include paying for capital expenses like equipment or hiring personnel. 

Explain where the money will go, and if possible, create a forecast scenario showing the use and repayment of the loan. Also detail where all your financing is coming from. Lines of credit, loans, or personal savings should be listed here alongside the loan you’re applying for.

Bankers will be giving this section a lot of attention. Here’s what you’ll need:

• Profit & Loss : This statement pulls in numbers from your sales forecast and other elements to show whether you’re making or losing money.
• Balance Sheet : This is likely the first thing a loan officer will look at. It covers your liability, capital, and assets and provides an overview of your business’s financial soundness.
• Cash Flow Statement : Essentially, this statement tracks how much money you have in the bank at any given point. Loan officers will likely expect realistic monthly cash flow for at least 12 months.

4. Summarize your business information

The executive summary is the first section of your business plan, but we recommend you tackle it last.

It’s an introduction to your company and summarizes the main points of your plan. While lenders will need to review your full business plan, they may use the executive summary as a quick way to determine whether your business is worth their time.

It may be your only chance to get the lender excited about your business. So, keep it to just one or two pages and be as clear and concise as possible. 

What to check before submitting your business plan to the bank

Before you finish your loan application and send in all your paperwork, be sure to review the following in your business plan:

• Did you complete every section? Business plans have a fairly standard outline that lenders expect to see. It might sound simple, but make sure that you don’t leave a section blank by mistake. If you want to verify that everything is correct, consider using a business plan builder that uses an investor-approved outline.
• Have you completed your full financial plan? Having detailed financials is expected. Your historical performance and financial forecasts tell the story of your growth path through numbers. Be sure that all of your financial documents are included and accurate. To go above and beyond, be sure to include the assumptions behind your financials and any financial scenarios you’ve been exploring.
• Is your plan concise? No one has time to read a 50-page business plan, and you probably don’t want to write one. Keep every section of your business plan to-the-point, and be sure to populate your executive summary. If something should be included but adds unnecessary complexity to your plan, go ahead and add it to your appendix.
• Did you pay attention to spelling, grammar, and punctuation? Small things really do make a difference, so dot those i’s and cross those t’s. If you can, have someone else review your business plan to catch any errors you may have missed. For another review, consider using an AI business plan generator to check your grammar and even rewrite sections to sound more professional.
• Is your plan realistic? Make sure your calculations, goals, and predictions are practical, and that you back-up your plan with good market research. Also, double-check that sections of your business plan don’t contradict one another.

If you need help writing your plan

Getting a business loan isn’t easy. According to Federal Reserve Data , only 31% of businesses receive the total amount of financing they request.

Having a well-written business plan for your bank loan can go a long way toward you being among the businesses that do get the funding they ask for.

Not everyone feels confident writing a business plan themselves, especially if it’s needed to secure a bank loan. While you don’t need an MBA to write one, getting your business plan right often does require quite a bit of work. 

So if you need help writing your plan, here are a few options to consider:

• Download a free business plan template : Start with an expert-designed template formatted to meet lender expectations.
• Check out our guide on writing a detailed business plan : Dig deeper into what to include in every section of your business plan.
• Hire a professional business plan writer to do it for you: This is typically the most expensive route, but worth it if you’re pursuing $100,000 or more in capital.
• Sign up for LivePlan: It’s business planning software that provides a step–by–step process for writing any type of plan. It’s an affordable option that also gives you an easy way to track your actuals against your business plan, so you can get the insights you need to grow faster.

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How to Write a Business Plan for a Loan

Business plans are often required when applying for funds from venture capitalists or other private investors, but even if you are seeking a bank loan for your company it is very helpful to prepare one since the lender wants to be confident that he is taking on an investment with growth potential so that you can repay the loan.

In this article, you will learn about the types of business loans, the importance of the business plan in your application for a loan, and how to write a business plan that will help you get the funding you need for your company.

Download our Ultimate Business Plan Template here

What Is a Business Loan?

A business loan is funding that is provided by a financial institution to a company for it to carry out its day-to-day operational activities. It also supports the purchase of equipment, refinancing of debt, and other purposes. Small businesses might need these loans because they may not have enough funds to buy equipment, refinance debt, or because they encounter financial difficulties.  

Your Loan Application

You can apply for a commercial loan with your local bank, credit union, Small Business Administration (SBA) lender, or community development financial institution like Capital Impact. You should expect that the lender will ask you detailed questions about all aspects of your business to ensure that he or she is lending you money that will be repaid.

In addition, if you are looking to purchase a business or commercial real estate, the lender may ask for additional information and documentation to assess your qualifications and ability to repay the loan.

Before applying for a business loan it can be helpful to research different types of loans so you understand what is available and what you will need to pay attention to in your loan proposal.

Common Types of Business Loans

There are many types of loans for small businesses, including:

• lines of credit
• commercial mortgages
• equipment financing

Contact different lenders in your area to see what kind of loan terms they offer and if their interest rates are within your budget.

What is a Business Plan?

A traditional business plan is a document that provides an analysis of the present situation and future financial projections for a company. It includes details about the owners, management team, customers, location of the business, finances, marketing plan, and other information.

A comprehensive and well-researched business plan will help lenders make informed decisions about providing a loan for your business.

To help you get started, you can download our sample business plan for bank loan pdf .

Why Do You Need a Business Plan to Get a Business Loan?

A loan proposal business plan is your opportunity to show the lender you understand your business, its capabilities, and how it operates within the industry in which it competes. By putting together a clear and concise document that outlines all of this information, the lender should have a much easier time understanding how you have arrived at your numbers and where you are going in the future.

A business plan is also helpful to the lender because it provides an opportunity for him or her to ask you questions, further clarifying details that might not be clear from your application materials alone. This way the lender can walk away from the meeting with a good understanding of what he or she is loaning money to and how likely it is he or she will see the loan repaid.

How to Write a Business Plan to Get Approved for a Loan

Different lenders may ask for different sections of your business plan, but most require some combination of the following key elements.

1. Executive Summary

The Executive Summary is the first section of your business plan that a lender will read, but typically the last section written. It is very important because it acts as a snapshot of your business plan and allows the person reading to get an overview of what you are proposing.

The summary should include:

• A statement about why you need the business loan
• Details on how much money you want to borrow, when you will repay it, and interest rates
• A description of how the proceeds from the loan will be used
• Your business’s historical and projected financial information (again)
• The expected impact on your company and the industry as a whole if you are successful.

2. Company Description

In the Company Description, you should include basic facts about your company such as:

• What is the business structure (corporation, partnership, limited liability company (LLC), etc.)?
• How long has your company been in operation?
• What is the size of your workforce?
• What accomplishments or milestones have you achieved within the last year?

This section should also include information about your future business plans.

• How do you plan to expand, if at all?
• Who are your main competitors and how is your company different from them?
• What changes will you make to excel against these competitors?

3. Industry Analysis

In the Industry or Market Analysis, you should include information about your industry in general.

• What are the strengths and weaknesses of your industry?
• How will your company compete in it?
• What trends within the industry affect its future success or potential struggles?

You may also include information about your specific niche in the market. If your company operates in a very specific area of the industry, be sure to highlight it.

4. Customer Analysis

The Customer Analysis section of your business plan helps a lender understand who your customers are and why they will buy from you.

In this section, you should include information on the following:

• Your target audience and the individual customer segments
• How many potential customers you have within your target market
• How much your customers typically spend, and how much you expect them to spend in the future
• What has caused these changes or trends to occur and how they will impact your business

5. Competitive Analysis

This section should show the competitive landscape and how you plan to compete against your competitors.

• What are their strengths?
• Where do they fall short?
• What changes will you implement to get ahead of them?
• What are your company’s competitive advantages over these competitors?

6. Marketing Plan

This section should include a detailed description of the marketing strategy you plan to implement.

• What is your customer acquisition cost? How much will it cost you to bring in one new customer?
• How will you reach these potential customers? Be specific about your marketing strategy, advertising methods and costs.
• Who is responsible for implementing each part of the marketing plan and how much it is expected to cost?

7. Operations Plan

Your Operations Analysis should describe the way your company currently operates and how it will operate with the help of the loan.

• What are your company’s strengths? Weaknesses?
• What have you implemented in the past 12 months that has led to increased revenue, decreased costs, or improved efficiency?
• How will you continue to operate efficiently with the proceeds?

8. Management Team

In the management section, you should describe your business in terms of its personnel structure.

• What are the responsibilities of each person on your team?
• Who are they? What are their qualifications?
• How will their roles change when you receive the loan proceeds?

9. Financial Plan

This section should include your company’s financial statements include the projected income statements, projected balance sheet, and cash flow statements for the next 3 – 5 years.

You can assume that you will receive loan proceeds in 20XX, so plan accordingly.

Include a five-year break-even analysis and an explanation of how you arrived at your income statement and cash flow projections. Don’t forget to include interest and loan payments in your financial projections.

10. Appendix

In this section, you will include the supporting documents for the claims within your business plan. This section should include:

• A loan agreement
• A list of all applicable business licenses, permits, etc. that your company holds or has applied for

You may also include:

• An organizational chart for your company
• The resumes of the members of your management team
• The resumes of any employees who will be making a significant impact on your business with the loan money
• Copies of contracts, leases, and other agreements that are relevant to your business plan
• Complete financial statements and projections if you only include a summary in the Financial Plan section

These documents should be attached to your business plan in a separate file if they are not included and may need to be submitted with the final small business loan application.

Tips for Writing a Business Plan for a Loan

To have a successful business plan and loan application, you need to know exactly what information your loan officer is looking for and how to find it.

• Before you submit your application, be sure to carefully edit and proofread it for errors. Errors in a business plan may lead a lender to question your attention to detail, so make sure it is polished and error-free.
• Always be sure to include an executive summary of the main points of your plan at the beginning, as some loan officers may not read all of the details.
• Be sure to keep your tone professional and business-like.
• Include detailed financials, market analysis, and other crucial information.
• Remember that any omission or inaccuracies will be carefully scrutinized by a lending officer, so be sure you have all of the necessary documents before submission.
• Finally, remember that lenders often appreciate creativity and outside-the-box thinking when it comes to business plans, but don’t let it distract from the necessary information for your application.

Writing a good business plan is one of the most important and necessary steps toward securing a loan or other source of capital.

Use our proven business plan template provided below, and you’ll be able to give your lender all of the information they need to make an informed decision.

The key is to do it right. By following the steps outlined above and including all of the necessary documents (and editing/proofing your application), you should significantly improve your chance of securing a loan for your business.

How to Finish Your Business Plan in 1 Day!

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How to Write a Professional Business Plan for a Loan

Business Plan Template

• March 27, 2024
• 11 Min Read

So, are you thinking of getting a loan or funding to start an exciting business journey?

That’s great! But before you go any further, it’s very important to have a solid business plan in place.

Well, we understand that creating a successful plan for a loan can be a daunting task. That’s why we’re here to help you!

This investment-ready business plan template for loans will help you include all the essential elements in your plan, from summarizing your business concept to projecting the financial data. It not only impresses business loan lenders but also sets the stage for success.

Ready to get started? Let’s first understand how business plans will help you with loan proposals.

How business plans help in loan applications?

A business plan is a professional document that serves as a written loan proposal if you want to secure a loan for capital investment. It details every aspect of your business, including its concept, goals, market opportunity, and financial data.

Whether you’re a new entrepreneur or a small business owner, you’ll need a well-prepared business plan. It helps you persuade potential investors or lenders of its viability and potential for success.

Here are a few primary reasons why business plans are necessary in loan applications:

It helps you showcase your vision

A well-written business plan communicates your business vision effectively and allows you to demonstrate your clarity of purpose and strategic direction. It offers lenders a compelling narrative of what your business is aimed for and how it will achieve its goals.

It helps you prove your financial feasibility

Well, lenders need assurance that they’re making a wise investment. A detailed business plan presents them with realistic financial projections, along with how your business will earn money and repay the loan. This infuses confidence in lenders and convinces them that your business is a safe bet.

It helps you mitigate potential risks

Once you start your business, it naturally involves fair enough risks. However, a good business plan clarifies that you’re aware of those challenges and have backup plans or strategies to mitigate them. This shows lenders that you’ve considered different situations and keep contingency plans in place.

It helps you demonstrate your preparedness

A business plan shows lenders that you’ve carefully outlined every aspect of your business—from conducting market analysis to predicting finances. It assures that you’re serious about your business and well-prepared to manage the ups and downs of starting a business.

In short, having a solid business plan can be the cornerstone of a successful loan application that explains your business idea and how you plan to utilize the loan money to get started.

Now that you know how business plans help in a loan application, it’s time to check out and understand the key elements of a business plan for a loan template.

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Key components of a successful business plan for a loan

1. executive summary.

An executive summary is the first section of the plan, providing a concise overview of the entire business plan.

Generally, it is written in the last, as it summarizes the most important components you mentioned in your plan.

Since the potential investors or lenders would read this section first, make sure that you keep it simple, crisp, and compelling to build their confidence in your business. Also, it should not be more than 1 or 2 pages.

You may write your executive summary with a precise explanation of your business concept, the type of business you operate, and its status.

Here are a few primary elements you must add to your summary:

• Your company’s mission statement
• The product or service you intend to offer
• Market Opportunity
• Management team’s background and experience
• Growth plans or long-term objectives
• Financial projections and funding needs

2. Company Overview

As you’ll give a brief introduction in the executive summary, this chapter will expand on it, providing an in-depth understanding of your business.

Company description includes all the business-related facts, such as the startup concept, vision-mission statements, company location, etc. Also, it explains the problems or challenges you aim to solve.

In addition to that, consider answering a few questions that would help lenders to grasp the significance of your business:

• What is the legal structure of your business?
• Who is the business owner?
• Do you have any business partners?
• Why did you start this business, and when it was founded?
• What are your business accomplishments to date?
• Who will get benefits from your company’s product or service?

Note that the company overview section can be regarded as your extended elevator pitch.

So, it’s a good opportunity to present your business’s specific details and structural aspects that the financing partner needs to know.

3. Market Analysis

The market analysis section provides readers with a deep understanding of the specific industry or market in which you plan to serve.

This seems unnecessary but serves different purposes. Those who are looking to fund a franchise business should do some serious work for this section, as lenders will review it very closely.

To carefully draft this section, you should conduct thorough market research and industry analysis to define your target customers, industry trends, market demand, and competitors.

This will demonstrate that you understand the market dynamics and validate the demand for your products or services.

Here are a few elements you should include in your market analysis section:

• Ideal target market
• Market size and growth potential
• Customer segments
• Competitive analysis
• Emerging trends
• Applicable government regulations

4. Product or Service Offerings

In this section, you may provide a detailed description of your products and service offerings, along with their features, benefits, and pricing structure.

It helps you highlight what your business offers to its ideal customers, how your offerings will satisfy their needs and explains the value proposition of your products or services.

You may consider including these points in the product or service section:

• A brief description of your product & service
• Pricing details
• Intellectual property, copyright, and patent filings
• Quality measures
• Any additional offerings

5. Sales and Marketing Strategies

Your marketing and sales plan elucidates how you intend to market your products or services in greater detail. It helps you outline the marketing and sales strategies you’ll use to attract and retain potential customers.

The primary goal is to give a flexible and practical marketing and sales strategy that persuades the lenders you know how to advertise or develop a public relations campaign to reach the company’s revenue goals.

For a well-crafted marketing plan, you might consider adding the following details in your plan:

• Your target audience and brand positioning
• Detailed marketing strategy
• Sales and marketing goals and KPIs
• Sales and marketing budgets
• Customer retention plan

While reviewing your loan application, lenders would like to know how you plan to make money and how you overcome marketing and sales challenges, so ensure that this strategy is always relevant.

6. Operations Plan

The operations plan section provides a clear picture of your company’s day-to-day operations and activities. It is a detailed-oriented section that outlines how you’ll manage to run your business smoothly.

Also, operational excellence is necessary to achieve your goals, satisfy client commitments, and maximize results. So, try to mention your operational intricacies and showcase efficient systems and processes.

Here are a list of details you must include in your operations plan:

• Staffing & training
• Operational processes
• Inventory needs and supplies
• facilities & technology
• Regulatory compliance

By offering insights into these operational aspects, this section helps you instill confidence in lenders about your ability to effectively handle and grow your company.

7. Management Team

Your management team section introduces the key individuals who are responsible for driving your business ahead.

It helps lenders easily understand your team’s roles & responsibilities, educational qualifications, industry experience, and how you plan to compensate your leadership team.

Even this will assure lenders that your team is capable enough to navigate challenges, make informed decisions, and reach strategic objectives. Also, they feel confident giving you a loan—even if it’s your startup.

So, you may consider including the below information:

• Company owner profile
• Resume-styled summary of key executives
• Organizational chart
• Compensation plan
• Details of advisory board members(if any)

8. Financial Plan

A well-written and comprehensive financial plan is one of the most crucial sections of your plan, as it helps you prove to lenders your business’s financial health, growth potential, and ability to repay the business loan.

So, your financial analysis must include the projected financial statements for three years or more. The following are the key financial projections that you should add:

• Income statements
• Cash flow statements
• Capital expenditure budgets
• Balance sheet
• Break-even analysis
• Funding requirements

As well as you should also list hard or soft collateral if you possess it so that you can put it up to get a loan. Even lenders may request to add more granular data(such as cost of sales or cost per product/service).

Note that if you’re a startup and don’t carry enough data to highlight, consider including estimated costs, revenue streams, and other strategic future projections you may have.

9. Appendix

The appendix is the last section of a professional business plan that typically provides supplementary information and other supporting documents the lender may need for better understanding.

You may include the following details in an appendix:

• Business licenses and permits
• Contractual agreements or other legal documents
• Letters of reference
• Credit histories and tax returns
• Key managers’ resumes and certificates
• Product photos

By adding these details, you offer more detailed explanations or validation for your business plan, strengthening your discussions and claims.

What factors do lenders look for in a business plan

When you submit a business plan to secure funding, lenders will analyze it to evaluate the viability and creditworthiness of your loan application. Here are several key factors they look for:

Character of your management team

Lenders will assess a business’ character that includes subjective or intangible qualities like whether its owners or key executives are perceived as honest, competent, or committed. Also, they consider educational background, industry experience, skills, leadership capabilities, and credit histories. This can be critical for evaluating prospects as most lenders don’t wish to lend to whom they don’t feel trustworthy.

Your capability to repay loans

Loan officers also spend a lot of time analyzing the borrower’s ability to repay the loan. They will thoroughly examine the financial statements such as projected revenue, expenses, cash flows, growth plans, and loan payments. Further, lenders analyze the financial history to see how much revenue you have generated or how much profit you have made in the past.

The capital amount you’re seeking

While reviewing loan applications, lenders will go through your financial information that highlights how much funding you’re seeking, how much cash you carry on hand, and how much debt you have. Also, they assess your personal financial investments as a sign of commitment and seriousness. So, make sure your business plan clearly outlines your investment amount and funding needs.

Collateral or personal guarantees

In some cases, lenders may request collateral or personal guarantees to secure the loan. Thus, you should document any assets or valuable items you can offer as collateral or additional security. Even lenders may still approve your loan without collateral if you have a good credit history and a reliable business plan.

By understanding these key considerations, you can prepare a business plan that resonates with the lender’s interests and concerns. Now, let’s move to a few business plan examples for a loan.

Business plan examples for a loan

When you’re just venturing into your entrepreneurship journey, crafting a comprehensive business plan for a loan application can be overwhelming.

So, try to consider some sample business plan templates or resources to get started on the first draft of your plan. Here are a few business plan examples that you may find helpful:

• Sample business plan outline
• Small business plan template
• Comprehensive business plan writing
• Business Plan Workbook for Loan Applications

Start preparing your business plan

Finally, you understand the importance and key elements of drafting a business plan for securing a loan or funding. But it requires some extra effort to find success down the road.

If you’re still confused about where to start, Upmetrics could be a great choice. It’s a modern business plan app that helps entrepreneurs or small business owners create an actionable plan quickly.

With Upmetrics, you’ll get easy-to-follow guides, a library of business plan templates , AI support, a financial forecasting tool, and other valuable resources to streamline your entire business planning approach.

So, don’t wait and start preparing your business plan for a loan!

Build your Business Plan Faster

with step-by-step Guidance & AI Assistance.

Frequently Asked Questions

Do i need a business plan to get a loan.

Of course, most lenders or financial institutes require a solid business plan, even if you are a well-established business. A well-crafted business plan helps you highlight every essential information about your business and demonstrate to lenders that you have a realistic plan in place to generate income and repay the loan.

Can I write a business plan myself?

Definitely, you can write a business plan by yourself. Also, you can get help from various resources available, including business plan templates and guides, to create a comprehensive plan. But, if you’re unsure or need assistance, you may consider having a business plan software or hiring a professional writer.

How long should my business plan be?

The length of your business plan should be concise and focused, typically depending on its purpose. A one-page business plan is a single-page document, a lean or mini business plan comprises 1–10 pages, while a comprehensive business plan can range from 15 to 35 pages and beyond.

What's the most important element of a loan-seeking business plan?

The financial plan is the most crucial element of a loan-seeking business plan, as lenders want to check realistic and well-structured financial forecasts that present your ability to repay the loan. Also, this section can make or break a lender’s confidence and willingness to raise capital.

What format should I use?

It’s essential to select a format that can effectively convey your business idea, strategy, and financial projections to the lenders. Following are a few common options to consider:

• Traditional text-based document
• PowerPoint or Keynote presentation deck
• Executive summary or a pitch deck

So, whatever format you choose, it should align with your preferences, the lender requirements, and the complexity of your business.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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How to Get a Small Business Loan in 7 Simple Steps

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Sooner or later, many small-business owners consider taking out a loan to supplement their business's growth. But small-business loans can be tricky lines of capital to obtain, especially if you don't know much about the application process. And with the broader banking system still reeling from the collapse of Silicon Valley Bank and Signature Bank, you’ll need a rock-solid plan and squeaky-clean paperwork before you even approach a bank.  

That preparation begins here with these seven crucial steps for nailing down a business loan.

• Establish your reason for the loan
• Learn how lenders assess you
• Determine which type of loan you need
• Decide on a lender
• Gather the right financial documents
• Apply for the loan
• Keep building your financial profile

Lendio partners with over 75 lenders, which improves your odds and efficiency to get the funding you need.

Qualifications:

$50k in revenue

6 mos. in business

560 credit score

1. Establish your reason for the loan

The lender is going to hand over a significant amount of money to your business, and they’re going to want to know how and why it’s being spent. It’s a valid concern: how you invest the loan will affect your business’s income and ability to pay it back. Stocking up inventory or covering payroll are valid reasons banks and other traditional lenders would consider your loan application. (Purchasing a recreational 3D printer for the breakroom . . . not so much.)

General rationales for small businesses seeking loans include managing daily expenses, expanding or purchasing equipment, building a cash buffer against possible future shortfalls, or just starting a business. Also, determine exactly how much money you’ll need to borrow—don’t ballpark it and end up with too much to pay back or too little to cover expenses. A loan calculator can help you determine how much you can afford to take out, interest rates and all. 

2. Learn how lenders assess you

Banks and lenders have their own formulas to determine if a loan will likely be paid back. In the case of small businesses, the formula usually involves—but isn’t limited to—five factors for consideration. Since small businesses also tend to be newer operations, they’re probably not going to excel in every area, but if they’re strong in at least three of the five, that can help level the bank’s assessment. Factors to pay attention to include the following:

• Credit score and history. If you’ve repaid loans responsibly in the past, the potential lender will find out—and they’ll also find out if you haven’t. Banks can assess business and personal financial histories through a variety of avenues, but most loan processes begin with a credit review .
• Collateral. What do you own that could cover the loan in case of default? Most banks and lenders will require something of value to shield the lender. Typical business items that qualify as collateral include real estate, buildings, vehicles, equipment, inventory, and accounts receivable.
• Cash flow. The more money your business is currently making, the less of a loan risk it’ll be to the lender. Banks and lenders will not only look at the amount of profit you’re bringing in but also examine how you’re managing it. 
• Time in business. If you’ve been functioning as a business for several years, you’re probably doing something right. Startups and newer businesses won’t have time on their side, but a solid, executable business plan for reaching milestones will go a long way toward evening the odds in the lenders’ eyes.
• Industry. What’s the forecast for your line of business? For instance, if you had a successful local brewery last year but six more are fermenting in the area this year, your competitors might start to cut into your business's profits. Lenders might take current industry trends into consideration when deciding whether or not to approval your loan request.

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3. Determine which type of loan you need

Most traditional small-business lenders have strict requirements about your business's time in business and revenue. If you’re just launching your business and haven't started earning revenue, you'll have an easier time qualifying for a personal loan over a traditional small-business loan.

But there are multiple types of loans beyond traditional personal and business loans. Here are some of the most popular options.

Common loan types overview

We've overviewed the main types of loans—now let's look at a few more details.

• Term loans. With term loans , business owners receive a lump sum of money from their lender, which they’ll repay over an agreed-upon time. Along with repaying the principal loan amount, borrowers will repay interest accrued on the loan. Term loans are best for established businesses with solid credit that need expansion cash quickly.
• SBA loans. The U.S. Small Business Administration backs bank loans that meet strict borrower guidelines. This backing instills the confidence in banks and lenders to take chances on applicants who’ve previously been turned down. SBA loan interest rates are typically low, but the approval process can take months.
• Business lines of credit.  Less rigid than a bank loan, a business line of credit gives you access to as much capital as your credit limit will allow, but you pay interest only on the cash drawn. Business lines of credit work well for covering short-term expenses or annual downtime for seasonal businesses.
• Business credit cards . Like business lines of credit, business credit cards give business owners near-instant access to a revolving line of credit. Business credit cards often come with rewards and even sign-up bonuses, which you won't get with lines of credit, but the repayment terms are typically stricter and the APR much higher. 
• Commercial real estate loans. As the name implies, commercial real estate loans are for the purchase, development, and construction of business structures—offices, storefronts, hotels, etc.—typically for lease or rent to other businesses. Terms for these loans range from less than five years up to twenty.
• Invoice factoring and financing. With invoice factoring , you sell your business’s as-yet unpaid invoices to a factoring company, which then becomes responsible for collection from your customers. Conversely, invoice financing uses those invoices as collateral for a loan. Both generate cash fast.
• Equipment financing. When you take out a loan to buy business-related equipment , the equipment itself becomes the collateral, and the terms of the loan are determined by the expected lifespan and value of the equipment. As long as it doesn’t become outdated, owning it is good for building equity.
• Microfinancing. Microloans , or short-term loans under $50,000, can help business owners build their credit score as well as their cash flow.
• Merchant cash advances. If your business makes considerable and consistent credit card sales, a merchant cash advance can be a quick source of capital. After the lump-sum loan is made, it’s paid back through a daily withholding of your credit and debit card sales or weekly bank account withdrawals. Merchant cash advances are quite risky, and the repayment terms and interest rates are brutal if you miss a payment. Typically, we recommend merchant cash advances only as a last resort, and only if you're sure you can pay them back immediately.

4. Decide on a lender

After settling on which type of loan you need, it's time to choose a lender. Not all business financing venues, or even traditional lenders, are the same. If you're not sure where to start looking for lenders, here are a few of our favorites.

Recommended lenders

Data as of 2/8/23. Offers and availability may vary by location and are subject to change. *Does not represent the typical rate for every borrower, and other fees may apply.

Main types of lenders

Banks are typically seen as the traditional place to get a loan—but as you can tell from the table above, you have quite a few options to get a loan apart from going directly to a bank. Here are some of the main types of lenders you can choose from as you consider loan applications.

Direct lenders usually include banks, wealthy investors, asset-management firms, credit unions, and other traditional lenders. These types of lenders deal one-to-one with borrowers—you don't go through a third party to acquire a direct loan. 

At Business.org, we recommend direct lenders Kabbage , OnDeck , and Accion for small businesses in dealing with financial institutions.

A lending marketplace collects loan options from networks of business funders, including traditional banks. Online lenders typically have a fast turnaround but require decent credit scores. Business.org's favorite lending marketplace is Lendio , which partners with 75 or so lenders and matches you with the best loan offers after you submit your application.

Peer-to-peer lending is a form of direct lending that lives almost exclusively online. Investors browse borrower profiles and choose businesses they’d take a chance on. (You've probably funded a few small businesses, projects, or individuals on platforms like Kickstarter and GoFundMe.) A peer-to-peer loan can come from one or several investors.

If you're interested in finding a peer-to-peer loan, we recommend looking at Lending Club and Funding Circle .

5. Gather the right financial documents

Whichever type of lender you go with or type of loan you apply for, you’ll need to present financial documents that explain where your business stands financially.

Of course, lenders will typically look at your credit score (including your FICO score, if you're taking out a personal loan to fund your business). But your credit score isn't enough information for lenders to determine whether or not you're loan-worthy ("lendable"), which is why lenders typically require an assortment of the following documents:

• Financial statements, such as profit and loss statements , cash flow statements, and balance sheets
• Business and personal credit reports
• Business and personal tax returns for at least the last year
• Business plan
• Business forecast
• State registrations and licenses
• Legal documentation, such as articles of incorporation, commercial leases, franchise agreements, etc.

6. Apply for the loan

If you’re applying for a substantial amount of money, you’ll want to allow your business plan plenty of lead time. Depending on the loan and lender, the loan application process can take months. Using some avenues, like lending marketplaces, can speed up the application and approval course, but in most cases, actually getting the money isn’t an overnight proposition for startup business loans.

Beyond the loan amount itself, tacked-on fees can take you by surprise if you’re not paying attention. Keep an eye on loan application fees, SBA loan guarantee fees, early repayment fees, and late repayment fees, as they’ll eventually affect your annual percentage rate (APR). By the time you apply, you should have a reasonable level of comfort with your ability to repay the loan on time and with the payment schedule, the APR, and the included fees. 

Remember, you want to know how much the loan will ultimately cost, interest and all. As you're getting your documents in order and starting the application process, use a loan calculator to ensure you're taking out the right amount of money. 

7. Keep building your financial profile

Improving personal credit, establishing business credit , paying down existing debts, maximizing income, expanding assets—these are all ways to build up your financial profile for future growth. It may seem backward, but banks prefer lending to businesses that don’t desperately need the money. It’s in your best interest to negotiate from a position of capital power.

While running your own operation doesn’t necessarily get easier, your future small-business loan processes will become more painless going forward, now that you’ve begun building your financial profile. Establish and build your business credit, and  then you’ll be able to rely upon yourself instead of playing the economic odds.

Alternatives to business loans

Personal loans.

Newer businesses may not qualify for many small business loans — that’s where personal loans come in. Personal loans are authorized based primarily on your personal credit score .

Some personal lenders, like Upstart , will approve loans to individuals whose credit scores are as low as 300. But most personal loan providers require at least a 580 credit score.

Personal loans can range from $1,000 to $100,000 with an interest rate span of 5.99% to 35.95%. In order to qualify for higher amounts, you’ll likely need to secure the loan with some kind of collateral . 

Your personal credit and assets are liable in the event of defaulting on a personal loan. With many business loans, only business assets will be at stake. But, as long as you’re comfortable with the risks, a personal loan can be another way to secure financing.

Personal credit cards

Personal credit cards are a great way to build credit in pursuit of a wider variety of lending options. Credit card APR ranges from 15.16% to 24%+ depending on your credit score.

If you have a credit score below 579, your lender may only offer a secured credit card where you make a cash deposit as collateral. You won’t have as much borrowing power because your credit limit will be a percentage of your collateral. Still, a secured credit card can help you build credit. 

Your lender will decide your credit limit, but the average limit is around $13,000. The key to building credit — no matter your limit — is to consistently make your payments on time. Keep up with that and you’ll be able to apply for better lending products in no time.

The takeaway

Depending on if you have an established business or are just starting out, there are many attainable ways to get funding via small-business loans, including personal loans for first-time small-business owners.

Take a look at your financial wellbeing, documentation, and consider applying for a loan through your local bank, the SBA, or the multitude of online lenders—keeping in mind their specific fees and borrowing terms.

Wherever you’re at in your business journey, there are multiple options available for a first-time business loan.

Want to learn more about small business loans and financing? Check out our ultimate guide to small-business loans.

Related reading

• SBA Loan Rates Explained

Best Small Business Loans

• How to Apply for a Business Credit Card
• How to Build Business Credit: 5 Steps for Improving Your Business Credit Score

Small Business Loan FAQs

Some business lenders require around $10,000 of revenue per month while many require $30,000 or more per month. Your business revenue requirements depend on where you apply and what kind of loan you’re applying for. Be sure to check your lender requirements before you apply.

Yes. There are a few ways to approach securing a loan with bad credit . You can apply for a secure or collateralized loan or apply for a lending product that isn’t related to your credit score — something like an invoice factoring loan . 

You can also apply for microloans , some of which have no minimum requirements. Additionally, there are lending marketplaces like Lendio that send your application to multiple lenders.

No. Many small businesses loans are easy to obtain. Take Lendio’s small business loans , for example. You fill out a 15-minute loan application and Lendio sends your request to a marketplace of lenders who will make you offers. Just like that, you have business loans available to you.

That said, there are some factors that may make securing a loan for your business more difficult. If you have poor business credit or your business is relatively new, for example, it may be difficult to get approved for a loan.

You may still be able to apply for a personal loan if your business credentials aren’t solid yet. 

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How to write a business plan

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Every business owner can benefit from writing a business plan, including those in the early stages of launching a business . A well-crafted business plan communicates the business’s strategy for growth to key leaders and investors. It’s also an important step to getting a business loan since many lenders require it.

Let’s walk through the steps and elements of writing your ideal business plan.

Key takeaways

• A business plan outlines how you plan to bring products or services to market
• Many lenders require a business plan be included with a loan application
• You can choose to write a lean or traditional business plan
• It covers everything from market research to your marketing and financial plan.

What is a business plan?

A business plan is a document that outlines a business’s strategy for bringing a product or service to market. It describes the company, product idea and goals or steps that the business will take to achieve growth. The document includes multiple sections that provide insight into each part of the strategy.

The business plan can be a simple document called a lean business plan or a more detailed traditional business plan. The lean business plan covers the basics of the company, product, target customers and how it will get revenue. It may only be one page with short descriptions for each part.

The traditional business plan includes more depth on the goals, measurements, research and marketing strategies to get the business where it’s going. Here are key differences in the information written for each type of business plan:

Although there’s no one-size-fits-all approach, follow these steps to create a strong business plan.

Write an executive summary

An executive summary is the introduction to a business plan, giving the key details about your business model and the product or service you’re offering. While there’s no strict formula for writing this section, you should include all the relevant details that you’d want a key partner or investor to know.

It should describe your product or service idea, target market and key objectives for growth within the next few years. It may also summarize your marketing and sources of revenue or funding.

You can adjust what to include based on the exact business you’re starting and its business model. Most business plans keep the executive summary to one to two pages.

Create a company description

The company description should overview important details about your company. It can state your company’s name, location and type of entity as well as describe its history. It should also clearly define the vision that you have for your company’s future in the form of a mission or vision statement.

You may also outline the structure for managing the business, listing key roles and responsibilities and the people filling those roles. Depending on the details you included in the executive summary, you might include information about your product or service.

Describe your value proposition

The value proposition is your chance to pitch what makes your business stand out. It identifies the customer’s problem or gap in the market for the product or service you’re offering. It then goes into detail about how your business will solve the problem.

The value proposition can also explain major barriers that customers have before making a decision and what your business will do to break through those barriers. It shows leaders and investors that you have a thoughtful purpose behind the business you’re creating.

State your business goals

The path to achieving success starts with knowing what success looks like. Many business plans state its main objectives in the company description. Others describe those goals in a separate part of the business plan to dive deeper into the specific goals.

You can also include key measurements you’ll use to gauge whether your business is achieving its goals. You would then use these goals in other business planning documents, further breaking them down into defined short-term steps that ladder up to the larger goals.

Outline your product and service

Next, you want to dive into the main product or service that your business is offering. Explain what the product is, how it works and the benefits that it brings to customers. If you’re planning to make multiple products, you can include a description of each product line. Show how this product or service is set apart from similar products from competitors.

You can also use this section to show how the product or service is produced, including cost of supplies and the price at which you plan to sell. Let the investors and stakeholders know if you have a trademark or patent for the products you’re creating.

Give a summary of market research

Next comes market research, the part of the plan where you do your due diligence to gather information and understand your target customers and competitors. First, you want to understand your target customers’ needs and any barriers they might have to buying your product.

You want to look for information about their demographics and how they might respond to the product you’re offering. This information will help you when designing your product and marketing it in a way that resonates with customers.

Then, you can look at the economy around your product, such as average pricing and sales revenue. This also includes research about your competitors, the market share that they hold and the barriers to entering your market. This section may include data from data research companies, surveys, focus groups and interviews.

According to the U.S. Small Business Administration , the questions you’re trying to answer include:

• Market size, or how many people may want to buy your product
• What people are willing to pay for your product
• Similar products already available
• Who your competitors are
• How your industry is doing
• Typical revenue gained by small businesses in your industry

Summarize a marketing strategy

Once you’ve clearly defined your product and who you’re selling to, you can come up with a strategy for how you’ll reach and sell to customers. In this section, you’ll include the different marketing channels you’ll use to promote your products and services.

These may include direct mailers, social media, traditional or online advertising or media events. The exact channels you use will depend on where you can easily find your target customers.

You can also describe the key messaging that you plan to use during marketing, which will pinpoint the value that it offers to customers. The marketing plan should also include the cost of marketing to different channels and your marketing budget. You can then outline the marketing goals and measurements you’ll use to see if you’re meeting those goals.

Create a logistics and operations plan

The logistics and operations section of your business plan is a detailed description of how your business will bring products and services to market. It explains how the business will run on a day-to-day basis. It should highlight your company’s management structure, give an overview of processes and describe the workflow from end to end. It can also include data on how many products you can make or how long it will take to make products or offer services.

Create a financial plan

Now that you’ve laid out the research, goals and planning, you can use that information to forecast revenue and build a financial plan. Use any past revenue or sales history as a starting point. Then, refer to your company’s recent growth and goals to calculate future financial growth.

If you’re a startup , you can use market research to estimate revenue for a startup in your industry. You can either forecast revenue manually or find software that projects revenue for you.

In your financial plan, you also want to create and track your business budget . You’ll track your estimated and actual revenue, updating regularly to keep the revenue forecast accurate and realistic. Next, you’ll list all expenses and their amounts, including one-time, variable, fixed or seasonal expenses. Here are some examples of different business expenses:

• One-time or capital expenses: Equipment, real estate, furniture, commercial vehicles, business licenses
• Variable expenses: Inventory, utilities, fuel, office supplies, shipping services, card processing fees
• Fixed expenses: Employee salaries and benefits, software, web hosting, office or equipment leases, business loan repayments

Business plan resources

Writing your business plan will take more than putting pen to paper. Try these resources to help you gather data, set up your finances and more:

• Business plan templates. Creating a business plan for the first time? Learn by looking up examples of other business plans or templates like these from Smartsheet .
• Software for accounting and financial planning. Many small businesses use Quickbooks, Xero or Netsuite to track revenue and expenses. These may also forecast revenue based on sales history.
• Business loan resources. To cover your funding needs, think through the types of business loans that would best serve your business. Once you’ve landed on a loan, compare features and interest rates to help you make a decision.
• Survey tools. For in-depth market research, you can build a survey and send to your target customers through a data research company like GWI.

Small business mentoring

Experienced mentors can guide you to making effective business decisions and unlock new potential for growth. Where to find small business mentors:

• SBA. You can find resources and free or low-cost mentors through the SBA’s local assistance tool .
• Small Business Development Centers. SBDCs provide specialized training programs in your local area covering specialized topics like marketing, data research and business management.
• Community Development Financial Institutions. CDFIs   are financial organizations like banks and credit unions that are built to develop the community. Alongside banking and lending services, CDFIs offer training programs and resources.
• SCORE. SCORE is an organization that partners with the SBA to bring resources to small business owners. Mentorship is at the core of what the organization does, and it can match you with a local mentor through its online locator tool.
• Local Chamber of Commerce. These local organizations are known for supporting business networking. They may help you find a mentorship program, or you may build a relationship with another successful entrepreneur through networking events.
• Nonprofit organizations. Some nonprofit organizations are dedicated to supporting small business owners with funding, trainings and mentorship programs. These are typically local programs. For example, NYPACE is a nonprofit that offers free consulting to underserved entrepreneurs in New York.

Bottom line

Your business plan should outline key information about your company, products and the strategy for getting those products in the hands of your customers. Every business plan looks different, but there is essential information to include in every plan, such as who your target customer is and your expected revenue. The business plan serves to help you get business funding and outline exact goals and steps to growing your company.

Frequently asked questions

Do i need a business plan to apply for a business loan, how do i write a simple business plan, what basic items should be included in a business plan, related articles.

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How to Write a Business Plan for a Small Business

Noah Parsons

24 min. read

Updated September 2, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of writing a business plan

If you’re reading this guide, then you already know why you need a business plan . 

You understand that writing a business plan helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your business plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After writing your business plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

When writing a business plan, the produces and services section is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

When writing a business plan, the operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

The last section of your business plan is your financial plan and forecasts. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI to write a business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of writing a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Writing a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of writing a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan

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I'm a multimillionaire, but I'm not leaving my kids any cash inheritance. I think it would be a mistake to make them wealthy.

• George Appling had $1 million in the bank by 36 and is now a multimillionaire.
• He doesn't plan to leave his three kids a cash inheritance.
• Instead, he plans to pay for college, a car, and a down payment and make business loans.

This as-told-to essay is based on a conversation with George Appling . It has been edited for length and clarity.

I met my now-husband Brian when I was 28, but we didn't have kids until I was 39 and Brian was 34. That was very intentional. I wanted to have financial security before taking on the financial obligations of kids.

When I met Brian, I was working as a business consultant. I later became an executive, but I always lived well below my means. Because of that, I had $1 million in the bank by the time I was 36. That allowed me to take the leap into my passion project: running a medieval fair .

Brian and I decided to have children with a surrogate. Now, one of my kids is 16, and the other two are 14. They know I have no plans to leave them a substantial inheritance. Here's what I'm doing instead, and how I talk with them about money and wealth.

I believe it's bad to make your kids wealthy

I don't want to leave my children money because I believe it's bad to make your children wealthy. If money comes too easily, it has a very good chance of ruining your ambition. I want my children to have the motivation to interact with the world.

Related stories

I went to Harvard Business School and attended a reunion about a decade ago. There, I attended a lecture on generational wealth . The professor asked who had heard the saying, "It takes one generation to build it, one generation to run it, and one generation to ruin it," a common refrain about wealth. He then showed us the same saying in dozens of languages.

If cultures all over the globe share this warning about the dangers of generational wealth, I think it's worth heralding. I'm also a history buff and believe history shows that leaving tremendous wealth is harmful.

I'll pay for a car, college, and first down payment

The kids know that I'll pay for their college (up to about $100,000 each), a down payment on their first home , and their first car. All of these amounts need to be reasonable and practical, not flashy or to show off.

My daughter turned 16 in April, so Brian and I took her car shopping. We set a budget of $25,000. She bought a 9-year-old Nissan Pathfinder for $23,000. The car was top-of-the-line when it was made, so it has some nice bells and whistles, but it's also very practical.

I'll establish a trust to make business loans

I have established a trust that will also pay for college , a car, and a down payment for my descendants in future generations. The trust, which I based on the Rockefeller family trust, will also make business loans to my descendants.

To get a loan, they must present a business plan that's evaluated by a third party. Each descendent will only get one loan in their lifetime, unless they pay the loan back in full.

My kids get a $25 weekly allowance

Each of my kids gets an allowance of $25 a week if they do basic chores, like cleaning up after dinner and emptying the trash. The allowance covers wants — like Starbucks, which they all love.

Brian and I pay for all needs. Of course, the lines between wants and needs aren't hard and fast. If the kids need $20 to go to the trampoline park with friends, I'll usually pay. If they need sunglasses, I'm happy to buy them a $25 pair, but if they want $200 brand-name sunglasses, they're on their own.

I demonstrate living below my means

One of the most important habits a human can make is to spend less than you earn . There's a huge comfort in having money in the bank. Living below my means helped me build financial security that let me start a family, so I demonstrate it for my kids. For example, I drive a 2016 Ford F250. It's not flashy, but it's practical for hauling horses and hay, so it's a perfect fit for my life.

I let the kids make mistakes with money

All my kids work during the summer and saved about $1,000 each last year. When the summer ended, they were spending quickly (again, on Starbucks). I warned them they were going to blow through their money. They didn't listen, and I let them make the mistake.

No amount of words from me could have the same emotional impact as realizing that the money they'd spent all summer earning had been blown on sugary drinks. In the future, I'll give the kids my opinion if I see them making mistakes, but ultimately, they'll need to live with the consequences.

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• Habari za Kenya Swahili

How to Get Cheap Mortgage Loans from KMRC, Their Interest Rate

• Kenya Mortgage Refinance Company (KMRC) removed the income limit for all Kenyans to access affordable home loans
• Initially, the lender used to refinance loans for borrowers whose minimum monthly income was KSh 150,000
• KMRC chief executive officer (CEO) Johnstone Oltetia explained to TUKO.co.ke that with increasing housing needs and in support of the government's affordable housing agenda, the lender took the step to standardise and stabilise the mortgage market
• Oltatia noted that all Kenyans with an income can visit a primary mortgage lender and get a home loan, after taking key steps like knowing what they want

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TUKO.co.ke journalist Wycliffe Musalia has over five years of experience in financial, business, and technology reporting and offers deep insights into Kenyan and global economic trends.

A house is the most important asset in a person's life, and owning one is a dream for many.

William Ruto's govt plans to borrow over KSh 193.5b from UAE in budget support

TABLE OF CONTENTS

Who is eligible for kmrc home loans, why kmrc home loans are affordable, what are the benefits of kmrc home loan, how to get kmrc home loan, what steps should you follow while applying for kmrc loans, how kmrc raises home loan financing, what to know about housing in kenya.

Kenya's housing deficit stands at 2,000,000 units , which the government intends to reduce through the affordable housing programme.

Kenya Mortgage Refinance Company (KMRC), mandated to offer affordable mortgage products to Kenyans, is one of the key drivers for affordable housing in the country.

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KMRC removed the income limit required to access a mortgage, making all Kenyans eligible for affordable home loans.

Initially, the lender used to refinance loans for borrowers earning a minimum monthly income of KSh 150,000 .

Speaking exclusively to TUKO.co.ke at the sideline of KMRC and the Financial Journalist Society of Kenya (FJSK) homeownership workshop on Wednesday, September 25, KMRC CEO Johnstone Oltetia explained that the move was aimed at supporting the government agenda.

"We removed the income limit for all Kenyans to access a home loan, either to build a house or buy land. KMRC is a key player in increasing homeownership to augment the government's commitment," said Oltetia.

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Oltetia cited the adjustable-rate mortgages that have dominated the market, noting that KMRC took the step to standardise and stabilise the mortgage prices.

KMRC offers long-term, fixed-rate and single-digit home loans extended to Kenyans through primary mortgage lenders (PMLs).

Oltetia noted that the partnership between KMRC and PMLs facilitates access to affordable home loans for Kenyans, especially those with low—to moderate-incomes.

"As long as you have an income you can visit a primary mortgage lender and get a home loan," he said.

KMRC provides long-term liquidity for mortgage lenders and ensures sustainability. It is the lender of last resort and standardises the mortgage lending practices.

KMRC home loans have a long-term repayment of 25 years and a fixed single-digit interest rate of below 10%.

"Our loan refinancing is up to 105% and offers mortgage tax relief. The loan interest is 9.5%, below the standard market rate of KSh 12.5%," KMRC Head of Credit Geoffrey Mwaura intimated to journalists.

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The refinancing firm conducts due diligence to ensure the property is genuine and insures the house once a borrower has secured the loan .

"We ensure the primary mortgage lenders (MPLs) offering you loan conduct due diligence before we refinance. This includes doing a search, for instance, if it is land, to know if the titles are genuine.

"This is an important step to make sure that our customers do not become victims of fraud," said Florah Muthaura, Head of Risk and Compliance at KMRC.

To get a KMRC home loan, one must visit a bank , micro-finance institution, or sacco partnering with the lender.

The institution will pull together several mortgages and get a refund from KMRC.

KMRC has partnered with 11 saccos, nine banks, and microfinance institutions to offer home loans. These are Imarika Sacco, Bingwa Sacco, Kenya Police Sacco, Harambee Sacco, Imarisha Sacco, Safaricom Sacco, Mwalimu National Sacco, Stima Sacco, Tower Sacco, Unaitas Sacco and Apstar Sacco.

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Banks include Absa, Stanbic, NCBA, KCB, KWFT, DTB, HF Group, Credit Bank, and Co-operative Bank.

"KMRC has been significant in the sacco sector mortgage financing. It has helped many co-operatives build capacity around mortgage products that meet the needs of their members.

"SACCOs that do not have enough liquidity to finance mortgage have solution for their members in KMRC products," Kenya National Police DT Sacco CEO Solomon Atsiaya said in an exclusive response to TUKO.co.ke .

According to KMRC , it is important to plan and budget before you could apply for a mortgage. The following steps are important:

• Organise your finances

First, know how much you can afford or qualify for a loan. Reach out to your financial provider to determine what is within your reach and how much you can afford to pay per month.

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Ensure your monthly payments do not exceed 40% of your total net income. KMRC recommends KSh 4,000 repayment for affordable home loans.

• Check repayment terms, including interest rate and period of repayment.
• Identify the property or house of your choice.

KMRC refinance home loans based on two categories:

• Affordable houses: home loans capped at KSh 8 million to individuals whose monthly household income is not more than KSh 150,000
• Market home loans: re-finance home loans above the affordable housing loans cap, with no income threshold.
• Visit a primary mortgage lender to get a home loan. This could be a bank, Sacco, or a micro-finance institution. The PML should be a member of KMRC.

The institution that you choose will then approach KMRC for refinancing your home loan

Ensure you get the best institution that will provide you with guidance on collateral, credit terms, and repayment plans and help you carry out research and due diligence.

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According to its 2024 financial statement , KMRC has offered home loans to Kenyans amounting to over KSh 8.7 billion.

In 2022, the lender raised KSh 8.1 billion for onward lending to primary mortgage credit companies.

Capital Markets Authority report indicated KMRC raised the amounts from the first tranche of a bond it floated in January 2022.

President William Ruto's administration planned to build 250,000 units yearly to offset the two million housing deficit.

Ruto said the Housing Levy collected from Kenyans will ensure the government achieves its mandate of lowering mortgage costs .

Proofreading by Mercy Nyambura Guthua, journalist and copy editor at TUKO.co.ke

Source: TUKO.co.ke

Wycliffe Musalia (Business Editor) Wycliffe Musalia is a Business Editor at TUKO.co.ke, with over five years of experience in digital media. He holds a Bachelor of Arts in Linguistics, Media and Communication from Moi University. Before joining TUKO.co.ke, Musalia worked as an editorial intern at Standard Media Group. Musalia has completed the full Google News Initiative (GNI) News Lab Advance digital reporting workshop. He has also undergone Procurement Fraud and Public Finance Management Training conducted by the Kenya Editors’ Guild. You can get in touch with Musalia via mail: [email protected].

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A lock ( Lock A locked padlock ) or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites. .

Hurricane Helene

• Português, Brasil

FEMA and the federal family are closely working with governments and communities to respond to Hurricane Helene. Follow directions from local officials to stay safe, as rainfall and flooding continue through multiple states.

Learn how to stay safe before, during and after a hurricane .

Resources for Affected Areas

Quick links.

• Alabama Emergency Management
• Be Ready - Alabama

Local Resources

• 211ConnectsAlabama.org
• Alabama Office of the Governor
• Alabama State and Local Referrals
• FEMA Region 4

Social Media

• @AlabamaEMA (X)
• @AlabamaEMA (Facebook)
• @FEMARegion4 (X)

Tribal Resources

• Poarch Creek Indians
• Florida Division of Emergency Management
• Florida Division of Emergency Management Shelter Information Index

For Florida state assistance, call 800-342-3557 .

• FL211.org or call 211
• Florida Office of the Governor
• Florida State & Local Level Referrals
• @FLSERT (Facebook)
• @FLSERT (X)
• @RedCrossNF (Facebook)
• @RedCrossNF (X)
• @RedCrossCentralFlorida (Facebook)
• @RedCrossCFL (X)
• Florida Governor's Council on Indian Affairs
• Seminole Tribe of Florida Office of Emergency Management
• Miccosukee Tribe of Indians of Florida (Facebook)
• Georgia Emergency Management and Homeland Security Agency
• GEMA Storms & Disasters Page
• Ready Georgia
• Georgia Office of the Governor
• Georgia State and Local Level Referrals
• @GeorgiaEMAHS (X)
• @GeorgiaEMAHS (Facebook)
• @GARedCross (X)
• Georgia Indian Council

North Carolina

• North Carolina Division of Emergency Management
• Ready NC.gov
• North Carolina Office of the Governor
• North Carolina State and Local Level Referrals
• @NCEmergency (X)
• @NCEmergency (Facebook)
• @RedCross_NC (X)
• North Carolina Tribal Communities
• Eastern Band of Cherokee

South Carolina

• South Carolina Emergency Management Division
• South Carolina Office of the Governor
• South Carolina State and Local Level Referrals
• @SCEMD (Facebook)
• SC Indian Tribes - Native Americans in South Carolina
• Tennessee Emergency Management Agency
• Tennessee Office of the Governor
• Tennessee State and Local Referrals
• @TennesseeEMA (X)
• @TennesseeEMA (Facebook)

Disaster-Related Tools

Images and Videos

View Hurricane Helene images and videos to see how FEMA and federal partners are supporting on the ground.

View on DVIDS

Multimedia Toolkit

Download  multimedia resources  such as social graphics, flyers, announcer scripts, accessible videos and animations in multiple languages to help you share important disaster information with others before, during and after a disaster.

FEMA in Your Language

Access information about disaster assistance programs, emergency preparedness, response and recovery activities, and flood insurance in multiple languages.

FEMA Mobile App

Download the  FEMA app  to get real-time weather alerts, prepare for a storm, and find shelters nearby.

Frequently Asked Questions

Get answers to  frequently asked questions  about emergency shelters, disaster assistance, flood insurance and more.

Common Disaster-Related Rumors

Learn more about  common disaster-related rumors  and the facts you need to jumpstart your recovery. Find information on identifying  disaster fraud  and how to report it.

Press Releases, Fact Sheets and Blogs

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