Business plan for obtaining a loan
Everyone dreams of starting to work for themselves, but this usually requires large financial investments. To open your own business, you need initial capital, which, as a rule, no one has. In this case, it is most logical to apply for a loan from a financial institution.
Nevertheless, banks do not always issue loans against a business plan from scratch. However, some organizations have special programs for these borrowers.
Before applying for a loan against a business plan, you need to carefully prepare. First of all, the representative of the bank will ask what kind of strategy the future activities of the novice entrepreneur will follow. The document must be prepared in as much detail as possible. The business plan for obtaining a loan indicates structured information, according to which the bank can be confident in the implementation of this project.
In addition, to obtain loans of this type, a collateral is required, which can be used as private property or other valuable property. You will also need to open an account with the selected bank. If the entrepreneur is employed at the time of registration of the documents, then the income certificate will only help to get a positive answer. Of course, you can try to get a loan against a business plan without collateral, but in this case, the chance of approval of the application is significantly reduced.
It is also worth considering that such loans are issued only to those who have an impeccable credit history. In addition, loans are not issued to people who have a criminal record.
It should be borne in mind that the main criterion for issuing a loan against a business plan is the borrower's solvency. If he has no income or any valuable property that can be pledged, it is more profitable for the bank not to risk it. Therefore, before quitting your old job, you should first think about the fact that it may be much better to apply with a permanent job.
And it should also be borne in mind that small business lending has more stringent conditions when compared with consumer loans. Therefore, if the initial capital does not require too large an amount of funds, then it may be much easier to get a consumer non-targeted loan. Consider step-by-step recommendations that will help you get a loan against a business plan. And you should start with the most important thing.
The fact is that, first of all, the development strategy of a new organization is needed not only for the bank to make sure that the given enterprise will be profitable, but also for the beginning entrepreneur himself. Without this document, it is impossible to correctly calculate and even more to justify the costs that the selected business will require.
A business plan for obtaining a loan is different from a regular business plan. In this case, we are talking about competently drawn up reports that can convince the banker of the reality of your idea.
A business planning report reflects a comprehensive assessment of activities, analysis of market conditions, consumer opportunities and needs, as well as the competitiveness of a start-up company.
Business Planning Process
A business plan for a bank when receiving a loan is drawn up in such a way that a bank employee can see the prospects for the development of your project, in connection with which you will be able to pay off debts on time.
The first thing you need to pay attention to is the financial side of the issue - the bank is interested in pledges, sureties, promissory notes, as well as the rate of growth of your profit.
When planning a business, you need to make reports honestly: do not try to throw dust in the eyes of a banker, indicating huge amounts of future income, if you yourself doubt this probability. The main thing for the bank is the systematic growth of income.
What should the plan consist of?
The report for the bank includes the following items:
- Brief information about the company. It describes the benefits of the project, the demand for the services or products being sold, expansion opportunities, etc. In fact, this point should be at the beginning of the reporting, but in practice it is often "pushed" to the very end in order to summarize the previous points.
- Industry characteristic. The characteristic describes the business concept: data about the enterprise, information about the goods or services sold, etc. Specify as much as possible what you plan to do - the more details, the better.
- Market analysis. Despite the fact that this section will be the third in a row on the document, it is recommended to develop it first. The reason is obvious: the prospects of the company and the efficiency of entrepreneurial activity in general depend on the indicators of market analysis.
- Economic data. This item consists of a strategic production development plan. This should include data on the calculation of future profits, all possible costs, etc.
- Marketing plan. The plan should indicate all possible ways to achieve the desired level of sales. It will not be superfluous to indicate the advantages of the products being sold, why they are better than competitors' products, etc.
- Technical information. Here you can find information about the technical revision of the product: for example, improving its efficiency (unique design, high quality, rarity, etc.)
- Production plan. The production plan contains information about the retail space, its supply, the availability of warehouses, etc. It is also necessary to mention the pros and cons of production (for example, when changing seasons).
- Information about company management. In this section, you need to describe the management structure: the number of employees, their positions, rights and responsibilities.
- Planned opening of the company. Everything is simple here: indicate in what specific period you intend to open an enterprise (day, month, year). Also, do not forget to mention the list of documents required to legalize an enterprise.
- Risk assessment. This point is very important for obtaining a loan for a business - on the basis of it, the banker decides whether to give you a loan or not. The risk assessment should be objective: list all possible "emergency" costs, business performance during inflation, and anything that would theoretically nullify your profit. Finplan. This plan consists of: indicating the value of goods sold (+ their cost price), net profit for the month / year and, accordingly, losses.
- Additional information. This item is optional, but if there is any information data that is not included in any of the listed items, it is worth mentioning it in this section.
- Business reporting should be short and voluminous at the same time. When studying a promising project, the bank can independently supplement its shortcomings, if the need arises. Prepare a report in detail, but without unnecessary water.
How does a business plan for a loan differ from a regular plan?
When planning your own business, any entrepreneur draws up a detailed plan and analysis of his idea. But the report for the bank is somewhat different from the usual one:
The state is trying to provide all kinds of support to small entrepreneurs. However, in order to open or expand their own business, often the entrepreneur does not have enough own funds. Today, you can apply for borrowed money for the development or opening a company in a banking institution. In order for a bank to start financing, an entrepreneur must draw up a business plan. The document will be studied, and funds will be issued for its implementation.
A business plan for obtaining a loan from a bank will be required without fail, since it is he who will ensure a successful business activity by 90% and is the guarantor of the loan return to the bank.
The preparation of the document should be approached with the utmost seriousness. He must prove that the project is cost effective. Otherwise, borrowed money may not be received.
How to correctly draw up a business plan for a bank loan
How to get a business plan loan? If we look at it as a whole, then the activity plan should fully reflect what exactly the entrepreneur will spend all the funds borrowed from the bank.
Papers must certify that:
- financing is needed at a given period of time;
- money will contribute to the development or creation of a business;
- the borrower is solvent and will not be able to return only the principal amount, but also the interest at which it was issued.
The business plan itself for a loan should consist of the following chapters:
- Executive summary or summary.
- Characteristics of the business sector.
- Market research and analysis.
- Calculation of economic indicators.
- Marketing plan.
- Modernization or revision of production.
- Production plan.
- Enterprise structure, management staff.
- Risk assessment.
- Evaluation of financial performance.
- Not included in other sections of the application.
Loans against a business plan are issued by many banks in the country.
Required package of documents
Many people dream of starting their own business without starting capital. Entrepreneurs and legal entities apply for loans from various financial institutions, but some of them are denied a loan due to incorrect business planning. In order to be guaranteed to receive the required amount, the preparation of a business plan for a bank must be entrusted exclusively to professionals - this will allow you to realize an old dream without unnecessary waste of time.
Why do I need a business plan for a loan?
Every novice entrepreneur wants to know the answer to the question of how to get a loan against a business plan. At the start of his activity, any newly minted businessman tries to raise funds for the development of his own business. Systematic cash injections into the business occur at the expense of third-party funds from investors or banks. Sometimes these sources are combined, and the business develops due to bank loans and investor loans.
A business plan for issuing a loan at a bank can be useful not only for beginners. For experienced borrowers who have their own business, it is no less useful. Starting a new business, anyone understands that additional funds will be needed:
- to pay for communications;
- pay salaries to employees;
- maintenance of vehicles;
- rent of premises;
- purchase of equipment;
- payment of utility bills, etc.
Therefore, it is advisable to immediately draw up such a business plan for a loan application, which takes into account all possible income and expenses, and business development is forecasted for years to come. This will help the future entrepreneur to be well oriented in the algorithms of the necessary actions, and will add a foothold to the business.
But this is not its only advantage. A business plan for obtaining a loan is necessary: it acts for lenders as a guarantee that the project will develop. This document is intended not only to reflect the smallest details of the new case, but also to provide a justification, to show its effectiveness, to indicate the advisability of new economic injections.
Legal entities and private entrepreneurs often need additional financial support in order to successfully develop a young enterprise. Raising funds from outside helps with any difficulties, therefore, it is necessary to be able to properly interact with investors. It is important to understand that loans for a business plan can be obtained from scratch if you take care of the literacy and effectiveness of the document.
By the way, any loan for a business plan involves the targeted use of funds, which will need to be documented in the future.
Why contact professionals?
When considering a business development plan, banking organizations pay a lot of attention to the indicators related to the main cash injections. Since profit is an accounting concept, its size can be manipulated as well as the organization's assets on the balance sheet. Many novice businessmen who are not looking for an answer on how to get a loan for a business plan, but who let everything go on their own, make many mistakes when planning and formulating a goal, which entail serious problems:
- unreasonably overestimate sales volumes;
- artificially underestimate costs;
- do not analyze possible risks;
- emphasize for quick profit;
- do not describe their own competitive advantages, killing the hope of getting fresh investment in the business.
In the article, we have collected expert recommendations on drawing up a business plan for obtaining a bank loan for business development and starting from scratch. Also in the article there are 5 examples of business plans.
What is a business plan
To get a bank loan for the needs of a company, you need to draw up a competent and economically sound project on paper.
A business plan for obtaining a loan is a type of document in which all opportunities to start or expand your business are analyzed and described.
In the plan, you should describe how you intend to use the funds received.
Differences from a regular business plan
There are a number of differences:
- In a business plan for a loan, you justify your need for financing, in a specific time period;
- you need to prove that borrowed funds are needed specifically for business development;
- the developed document must confirm that its owner is solvent and will be able to make payments on the loan in due time.
The plan should demonstrate to the bank's specialists that it is safe to lend money to you. For this, it will be analyzed and evaluated.
When a business plan is needed by a lending institution
The document will be requested from the credit institution if:
- you are an individual entrepreneur;
- loan funds are needed for a substantial period (more than 3 years);
- there is no sufficient collateral ;
- the company has been operating for less than six months;
- you are applying for preferential credit terms.