If you dream about starting a new business or expanding your business, well, you will need money in both cases to make your dream come true.
Thinking of getting a bank loan? Yes, you will need a business plan to get a loan!
First and foremost, getting a bank loan particularly for a start-up business is not easy. You are asking for a lot of money to start-up or expand your business with the motive of getting return on the investment. But, you simply cannot walk into the bank and ask for it. You have to have a plan for that i.e. a Business Plan for your business project. A formal business plan helps you to be focused. It is always advisable to do your homework before you ask for a loan.
Whether it is a start-up business loan or a loan for expanding your existing business, it is important to plan that how much exact money you need? And how you plan to use the money? In case of business expansion, it is necessary to assess the current state of your business and the key areas that require funding. In addition, if there is any collateral or security that you are willing to place against your loan.
Every business plan has to include task, deadlines, date, forecast, budget, and metrics and the content of your plan should match the purpose. However, a plan includes components such as executive summary, description of the company, product or service, market, management team, and financial analysis.
Executive Summary: It is the most important part of your business plan, which will be overviewed by the lender and management (in case of an existing business). You can either discuss it in the beginning or at the end of business plan.
Description of the company: It is indeed required to get information on history, legal establishment, and start-up plans of the organization.
Product and service: Then comes more information on what you are selling. The product and service you want to offer to the market.
Market: Market analysis will help you to know the kind of role your company will play, and the demand for products and services. It will also describe the customers’ need and the ways to reach them.
Management Team: It is a team of key members their background, list of investors, and business strategies.
Financial Plan: It includes planning of funds, type of structure, break even analysis, and policies for a start-up business. Where in, a profit and loss statement, balance sheet, and cash flow will also be required for the existing one.
As, “what, when, who, and how much” has already been discussed above the other important thing is the flexibility of a business plan. One cannot be rigid while implementing a business plan. No plan is good if it is inflexible. Though, a good business plan does take time, but make sure that you create one properly.
Therefore, A Business plan ought to be developed by every borrower to get the desired amount of loan from a bank or lender.
This article was submitted by Raj Tulshan, Director of Business Development of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to firstname.lastname@example.org