Use a Great Business Plan to Secure a Loan

Many people are daunted by the prospect of putting together any business plan, let alone one critical to obtaining a business loan.

Elements of a Business Plan That Works

Don't be overwhelmed by the prospect of how to write business plans. The Small Business Administration (SBA) offers tips on how to get your business off the ground, including resources on preparing business plans. You could also hire the services of a company that does business plan consulting. But with a little research on your part, you can learn the key elements of a business plan that works. These include:

  • general information
  • market information
  • financial information

General Information in a Business Plan

According to the SBA's Small Business Startup Kit, the following items should be included in appropriate, accurate detail in your general information portion of your business plan.

  •  Names of business, principals, social security numbers and business address(es)
  •  Loan purpose
  •  Amount of loan requested
  •  Description of the business, history, age and nature of the business, number of employees and all current business assets
  •  Ownership and legal structure of the business
  •  Profile of management, including background, education, experience, accomplishments and skills - for each principal of the business

Market Information in a Business Plan

Great business plans clearly define both the products of the company and those in the market. Explain the competition and how your product differentiates itself - how will you compete in this marketplace? Include a customer profile and provide sufficient detail as to how your business plans to meet their needs.

Financial Information in a Business Plan

Separating the great from the not-so-great business plan is the all-important required financial information. Lenders look carefully at your plan to see if you've included income and balance sheets for the past three years. If your business is a start-up venture, you'll need to provide projected income and balance statements. Include personal financial statements for you and other principal owners in the business. Since lenders want to see that business owners put enough of their own money into the venture, include a list of collateral that you'll pledge as loan security to the lender.

Format and Language

Be consistent in your format, whichever template of business plan you adopt. Use spell check to ensure that there are no typographical errors. Write professionally, avoiding superlatives and overpromises. Be factual, be precise, and convey a sense of confidence in your business.

What Separates the Good from the Great Business Plan

When a lender looks at your loan proposal, the singular document that portrays you and your business as an entity that is worth consideration for a small business loan is your business plan. The elements in it should reflect absolute honesty, be well written, impeccably organized and presented, and delivered in a confident, professional manner. This separates the great business plan that works from one that may merely be good.