Business plan template for loan funding is a simple business plan template for loan funding. It’s a business plan for bank loan example and business plan for loan application format. So, it’s a simple illustrative business plan for funding.
Therefore, whether you re a start-up entrepreneur or an existing business entrepreneur, this post is a must read for you. It’s meant to educate you and give you guide on how to make your loan funding business plan proposals from time to time. It’s very important.
Importance of business plan template for loan funding
Table of Contents
This is important for the fact that, approval of your loan request depends on how well you present yourself, your business, and your financial needs to the lender. What we mean is that, the best way to improve your chances of obtaining loan is to prepare a written loan proposal or business plan. This is because lenders look to loan proposals for certain evidences. The business plan will tell them that your business has strong management, experience, and a thorough understanding of the marketplace. They will also look for relevant financial information that demonstrates your ability to repay the loan. These highlights re well explained in this post.
Business plan template for loan funding Credit History
This is the beginning of everything. It helps to determine your ability to repay the loan. Lenders will often want to check out on your personal and business credit reports from any credit bureaus where they exist. In Nigeria it may mean contacting your banks for such information. Therefore, make sure that before you even start the process of preparing a loan request, your credit history is accurate and that any errors in the report have been corrected.
Loan Proposal Factors for
Business plan template for loan funding
Furthermore, before you start writing your loan proposal, there re four things that you need to be able to clearly address:
- How much money you need
- What your business will use the money on.
- How and when you will repay the loan.
- What you will do if the business fails to repay the loan.
There re many different formats you may use for loan proposal. You may want to contact the lenders to determine which format is preferred by them. In Nigeria, Bank ofIndustry (BOI), World Bank assisted loan funding NGOs and many others havetheir separate loan proposal format. So you must have to find out there beforeyou make loan applications. However, generally, a loan proposal should includethe following elements:
Business plan template for loan funding Executive Summary
This is where you start from. Therefore, begin your proposal with a simple and direct executive summary. This is because you will clearly and briefly describe or give certain information here without telling stories. These re who you re, your business background, the nature of your business, and how much loan required and how the loan will be used to help the company succeed. After this section, you will now give your personal and company profile.
Business Profile.
As a matter of fact, this is your opportunity to describe your business history and summarize your current activities and results. Therefore, briefly describe your market, your customers, and your industry. There is still a segment in this proposal for these. So be brief on these here.
Management Experience/Plan.
And now, as an existing company, describe your management experience, qualifications, and skills of each owner and key member of your management team. If you re a start-up, here is where you present your management plan. Give details of your personal profile and those of your other directors, and then explain the type of staff, experience and qualification you desire to join your management team.
Business plan template for loan funding Loan Request.
In continuation, here is where you must state the amount of money you need. Please, give details about how you determined this amount. It’s necessary you include quotes for equipment or supplies, for building costs, etc. In short, be able to answer the question, “Why do you need such amount of money?” That means, you will explain specifically what the loan will be used for and why it is needed.
Loan Repayment Plan.
Not giving orders, describe the terms you hope to receive – interest rate, term, etc. Therefore, you must keep in mind that loan terms will need to be negotiated with your lender based on their risk assessment of your business. But then, go ahead and prepare a loan repayment schedule. Show how you can meet the repayment schedule based on sales and cash flow projections.
Business plan template for loan funding Collateral
This is a very important page in the proposal. They call it collateral page. Every lender is interested in it, because that is what guarantees their fund repayment. So go ahead here to describe the collateral you would be willing to pledge as security for the loan.
As a matter of fact, every loan program requires at least some collateral that can be sold in case cash generated by the business isn’t sufficient to repay the loan. All loans should have at least two identifiable sources of repayment. Normally, the first source is always the ordinarily cash flow generated from profitable operations of the business. Then, the second source is usually collateral pledged to secure the loan. Your personal assets or net-worth could be an advantage here.
Business plan template for loan funding Personal Financial Statements.
Consequently, include financial statements for all owners with 20% or more shareholding in the business. These statements should be very current ones, not more than 90 days old. Some lenders may also require your tax returns for the previous one to three years.
Business Financial Statements.
Now comes the business financial statements, for an existing business. So you must include complete financial statements. These re balance sheet, income statement, and reconciliation of net worth for the last three years, plus a current interim financial statement which must not be more than 90 days old.
On the other hand, if you re a start-up, you have to provide a projected balance sheet and income statement. Please, realisable estimates. Over blotted estimates could throw your loan application out.
Business plan template for loan fundingEquity Investment.
This segment is where you will show your commitment to this business. It must be seen that you have some of your own money in the business to get a loan. The amount of your required commitment will depend on lender, type of loan, purpose and terms. Your commitment in form of equity can be built up through retained earnings or by your injecting cash (venture capital) into thebusiness. These re necessary because, most lenders want to see that the ratio of total liabilities or debts of a business is not more than four times the business equity.
Financial Projections.
Furthermore, you have to provide projected income and cash flow statements for at least one year or until positive cash flow can be shown. And then, be prepared to answer questions about how you will change operations if you don’t reach your projections.
Business plan template for loan fundingAppendix:
Finally, these documents, if applicable, will be attached.
- Lease agreement or copies of lease proposal,
- Franchise agreemen
- Purchase agreement,
- Certificate and Articles of Incorporation,
- Partnership/collaboration agreements,
- Copies of business licenses and registrations required for the busines
- Copies of contracts you have with third parties
Business plan template for loan funding Local Assistance
Finally, your goal in preparing a loan proposal is to show the lender that your business is a sound investment and will generate returns. Planning and preparations re key aspects to receiving the financing you need in your business. Complete Full Marks Consultants Limited provides confidential assistance in preparing business plan and financial projections at minimal cost.Contact us through +234 8034347851 and [email protected] Get advise on Business plan template for loan funding
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Deacon Anekperechi Nworgu, a seasoned economist who transitioned into a chartered accountant, auditor, tax practitioner, and business consultant, brings with him a wealth of industry expertise spanning over 37 years.
