How to Make a Great Business Plan for Procuring a Business Loan

A plan for getting an online business loan is like a map showing your business’s goals and how you plan to reach them. Before applying for a business loan from most lenders, you must show them a formal business plan. It is a good sign of how likely you are to be able to pay back the loan and how well your business will do financially. A strong business loan plan is an important part of any successful business, whether you’re trying to get money or are making a plan for strategic growth.

Here are three important things to keep in mind when thinking about the interest rate on a business loan:

Keep it brief:

The terms of business loans have to be clear and to the point. Investors look at many business plans daily, so it’s best to be clear and to the point.

Know who your business plan is for and write it in terms they can understand. Don’t use confusing words, ensure investors are taken care of, and keep product descriptions simple.

Don’t be scared:

Most business owners don’t have degrees in business and aren’t experts in their field. Instead, they are always learning new things. Making a business plan might not be as hard as you think if you know everything, there is to know about your business and are excited about it.

Steps to Creating a Business Plan that Lenders Will Like

The statement of the idea

Step 1: Figure out what makes your company stand out. It includes a value proposition, a target market, a product, a mission, and a brand.

Step 2: Research the market and the business The next step is to study the market to learn more about your target market, suppliers, experts in the field, competitors, and the industry you work in.

Step 3: Outline your business plan: After getting all the important information, the next step is to outline. You can follow the example set by the Indian government.

Step 4: Figure out what your business loan needs to cover.

Executive Summary

To summarize your business, you should list your business type, a brief description of the management, financial needs, and how you plan to spend your money.

Marketing Strategy

Talk about your product or service, your target market, your analysis of the competition, and the marketing strategies you’ll use to reach your sales goals.

Plan for making something

Explain how the product is made and how much time and money each step takes.

Financial strategy

This part is very important for the investor because it gives a detailed financial report on how your business is doing. Don’t forget to add the following:

• Cash flow statement
• Breakeven evaluation
• Get your money back (ROI)
• Sales and profit forecasts for the next three years
• Loan objective
• How long will the loan last

STEP 5:

Helpful information to: Give potential investors as much solid information as possible to improve your chances of getting financing for your business. You can add more information to the appendix by putting in documents like:

• Copies of contracts and leases are examples of financial records.
• What market research shows
• Books about money
• Permits
• Licenses
• The invoices

STEP 6:

Reevaluate: Check your company’s strategy to ensure you haven’t omitted any important details. To make sure the investor doesn’t get distracted by the mistakes and can focus on your business loan plan, try to make as few mistakes and spelling mistakes as possible.

What makes a business plan successful?

A good business loan plan explains your business and how and why it makes money.

A few basic things will help lenders understand your business and make you eligible for financing. At the same time, a business loan plan should have different parts for each company.

Executive summary

An executive summary is a summary of your business loan plan. It is usually only one page long. The goals of this section are to tell the reader about the company, summarise what they’ve learned in the other sections, and get them interested. However, how you use this part may depend on how old your business is.

Reputable companies

Executive summaries for businesses that have been around for a long time usually focus on past successes and future growth plans. In this case, the section might start with a statement of the company’s mission and then discuss how it works now and its finances.

Startups

Most people who get a startup business loan use the executive summary to talk about the business’s potential, target market, and how it plans to grow. The section could also talk about the competition in the market. Startup companies should use the executive summary to make a lender more confident in the business.

What should be in a business plan for lenders?

Lenders usually look at five things when deciding whether or not to lend money to a business: its character, its ability, its capital, its circumstances, and its collateral. Knowing these important things, you can make a business plan that speaks to a lender’s interests and preferences.

Capacity

Lenders may look at more than just your credit history, household income, and financial goals for your business. They may also look at your skills. If it makes sense, lenders will look at your management team to see if they have the skills to grow your business or keep it going in the right direction.

Capital

As part of the loan application process, lenders would look at your business plan to determine how much money you need to borrow and how you plan to pay it back. Also, they look at your income statement to see how much cash you have and how much debt you have.

In the same way, lenders often prefer business owners who have put more money into their businesses. A personal financial contribution shows that you care about the business and can pay back a big debt.

Conditions

Ultimately, a lender’s biggest concern is whether or not your business will do well. So, they look at your business plan and the market’s state to determine how likely your business will succeed. A strong business plan can convince a lender to give you money because the market or the way you want to run your business gives you a better chance of success.

Collateral

Lenders sometimes want proof that you own something valuable that they can use as collateral for the loan. This can be real estate, equipment, stock, or even money owed to the company. Even if you don’t have any collateral, lenders might still give you a loan if you have a good business idea and credit history.

Conclusion

A business plan explains how a company plans to do business and, in some cases, how the owner plans to use money, investments, and loans. It shows that a company is making money now and plans to keep making it in the future. A good business plan is well-written, realistic, clear, and, most importantly, convinces lenders that giving your company a loan is a good idea. Now that you have all the information, you can go to Piramal Finance for more information.