As a dynamic resource for the business community, we have an interest in helping your business succeed. Community Business Finance is involved with borrower education as part of our economic development mission to help businesses grow and, in turn, create jobs in their communities.
Are you prepared to approach lenders for a business loan? One of the first things a potential lender will ask to see is your business plan. In fact, it will be impossible to secure most loans without one. Given its importance, a business plan should be regarded as a formal document that is honest and detailed.
A solid business plan should generally include a description of the business, financial history, financial projections, and the management plan. This outline includes features that will answer the questions any lender is likely to ask. A more detailed description of the components follows the outline.
Features of a Business Plan
- Cover sheet
- Table of Contents
- Executive Summary
- Business Information
- Company Description
- Market Analysis
- Funding Request
- Financial Information
- Historical Data
- Prospective Data
- Supporting Documents
This is most important section of a business plan. This section identifies where your company is currently, and how you would like it to grow. It should highlight your company's strengths and why it will be successful. Even though this section is first in your business plan, it should be written last to accurately summarize the rest of the information. This is the lender's first impression of your company, so make it count.
Describe your company in broad terms that include the different elements of your business. Be sure to explain how your product or services meets a need in the marketplace, and the nature of your targeted consumers.
Describe your knowledge and experience in your market. Explain the economics of the market, including its current size and projected growth. Define your pricing structure and how it will impact your revenue. Include any market research and conclusions. You should also address how you will comply with any government regulations or requirements involving your business.
Identify your competitors in the market. Explain how your company is unique and how you compare with your competition. Include any percentages of market share that your competitors serve, and your current and projected market share.
Illustrate your organizational structure, with profiles of your management team and details of company ownership. It is important to explain the experience and qualifications of the people that make decisions for your company. Describe the divisions or departments in your company, and explain how these departments function within the company. It is helpful to include an organizational chart, showing who is in charge in each department. Explain how you will retain quality employees by describing salary compensation, benefits, and bonus structures.
Explain your funding requirements. Describe how much money you will need and how that money will be spent. Are you building a new office space or acquiring new equipment? Do you need working capital to fund a project? Explain how the expenditure will impact your business, and discuss your strategies for repaying the loan. This is critical information for the lender. They want assurance that you will be responsible with loan proceeds and have a plan to pay them back.
You will need to provide at least three years of historical financial data. Include income statements, balance sheets, and cash flow statements. List your company's assets that could be used for collateral.
Lenders want to know how you expect your company to perform in the future, usually the next five years. Include forecasted income and expenditures. Your projections should match your funding request. Adding a chart or graph that illustrates a ratio and trend analysis of your financial statements can quickly show a lender how your business will grow.
Include any information that will help the lender decide in your favor. Examples you might include are resumes for all principals, contracts with suppliers, letters of reference, and credit history.
Be sure to visit What You Need for a detailed list of more information that lenders require when seeking business financing.
Community Business Finance is proud to provide the best available financing terms to the businesses we serve. For more information on our 504 Loan Program visit our 504 School, or contact our offices:
In Texas call Bill Ebersole at 713-457-1650, ext. 201, or email him at email@example.com.
In Louisiana, call Jeanne Bergeron at 1-800-462-1017 or email her at firstname.lastname@example.org.