No matter the industry, location, or any other factors, every business needs a solid business plan.
A business plan acts as a guide for your business. It helps you establish milestones, create a budget, and implement marketing strategies.
Neglecting to prepare a business plan is one of the biggest mistakes made by small businesses.
Moreover, a business plan is particularly important when it’s time to apply for financing. Though not all lenders require a business plan, presenting one to your lender will show them why you need a loan, how you can repay your loan, and how the funding will help grow your business.
Let’s take a look at why you need a business plan and how you can prepare one to help your business get a loan.
What is a Business Plan?
A business plan is a highly-detailed guide that includes information regarding what your business is, what your future plans are, what your expenses are, and more.
A typical business plan will include sections such as:
- Executive Summary
- Company Description
- Market Research
The financials and funding sections are especially important for getting a loan.
These sections will show your lender what your projected expenses are, your projected revenue, and how much funding you need to accomplish certain business ventures.
Why Do You Need a Business Plan When Seeking Funding?
When applying for a business loan, there are several requirements that your business needs to meet to be approved.
It’s your job to demonstrate to lenders that you are a responsible borrower and can repay your debt on time.
Providing a business plan is a great way to do this. This can help your business demonstrate its financial capabilities so that you can obtain the financing you need.
There are several things lenders may look for in your business plan, including:
- Your business expenses
- Projected revenue and profits
- Business description
- Management structure
- Expected future expenses
- How much funding your business needs
This information helps lenders understand your company’s financial situation so that they can determine whether or not to approve your business for a loan.
How to Write a Business Plan to Increase Your Chances of Getting a Loan
Your company’s business plan should include any and all information that lenders may need to make their final decision.
Anything related to your company’s financials and potential to increase revenue or profits may be of interest to potential lenders, so it’s important to be detailed when preparing your plan.
Be sure to include the following sections in your business plan to help you apply for a business loan.
This might as well be the most critical part of your business plan, as it sets the tone for the whole document.
The executive summary is a clear and concise summary of the whole business plan. It helps readers get the gist of the entire document while piquing their interest so that they want to read more.
Here, you should explain how and why you started your business and what your future goals are.
This will help lenders understand how your business fits into the market and how much growth potential your company has.
The company description should typically be a brief one-page section to introduce lenders to your business.
Lenders may want to know who your management team is and what their experience is.
Be sure to list out all the managers involved in your business, what role they play in your company’s success, and how much experience they bring to the table.
A competent management team will help increase your chances of being approved for a loan.
Every business relies on marketing for growth and to build brand awareness — both of which are vital in your business’ financial success.
Explain your business marketing strategies, how they will help increase exposure, and how they can help your company expand.
You can also discuss how much these marketing strategies may cost, which is particularly essential if your loan will be used for marketing purposes.
This is where you go into detail about everything related to your company’s financials.
You should include:
- Projected expenses
- Projected revenue and profits
- Sales projections
- Marketing costs
- Inventory costs
- Planned future purchases (such as real estate, equipment, etc.)
You should also consider hiring a professional accountant to write a pro forma statement, which is a projection of future earnings and expenses. Pro forma statements are typically attached to business plans when applying for a business loan.
After digging into the financial details of your company, you should include an additional section specifically regarding your business’ funding needs.
Be sure to explain:
- How much funding your business needs
- What the funding will be used for
- How the loan will generate value for your business
- How you can repay your loans
- Whether or not you expect to need additional funding in the near future
- Anything else regarding your company’s funding needs
This is your chance to show lenders exactly why you need a loan, what the money will be used for, and why they can trust you to satisfy your debt.
All things considered, the financials and funding portions of your business plan will likely be the most important when applying for a loan. Be sure to be thorough and descriptive when preparing these sections.
Increase Your Chances of Approval With Camino Financial
Preparing a detailed business plan is a great way to guide your company and increase your chances of being approved for a business loan. Though, it’s not always necessary.
At Camino Financial, we strive to live up to our motto: No Business Left Behind. To do this, we offer business loans with fewer and more lenient requirements than traditional lenders. We do this to help small businesses obtain the funding they need to grow and succeed.
Our business loans don’t require you to prepare or submit a business plan to be approved. All we need is basic information about yourself and your company.
Our application form is very straightforward and only takes minutes to complete. Once completed, you’ll receive an instant quote, and your credit won’t be affected. And we don’t stop there: we’ll make sure to match you with the best financing solution that fits your needs in terms of loan amount and loan term, and that the funds offered will really help your business grow and succeed.
Our requirements include:
- Time in Business: 9 months
- Industry Requirements: Limited restrictions, including real estate, adult entertainments, and more
- Loan Amount: Up to $400,000
- Use of Funds: Limited restrictions
- Personal Credit Score: Not required
- Business Credit Score: Not required
- Annual Gross Sales: $30,000
- Collateral: Not required
- SSN: Not required
Additionally, you will need to provide the following documents:
- Tax returns (only for loans over $50,000)
- Bank statements of the last six months
- Proof of business registration
- Business licenses and permits
Ready to get started?