What information should be included in a business plan when applying for a bank loan?
I am in the market for a bank loan. What type of information should be included in the business plan to improve the chances of getting approved for the loan?
Each bank may have their own requirements but there are some key pieces of information that you'll do well to include.
- Your personal investment - How much of your own money have you already put into getting the business going? (banks will want to know that you are dedicated to making it happen)
- Your applicable skills and experience - This goes for you and anyone else on the team. Speak to your expertise and experience. Also mention anyone else on the team with deep knowledge of the industry. Mention any mentors or advisors that are helping you either personally or as part of your board.
- Be specific about amount needed - Be as specific as possible with the amount of money you are looking to borrow. You don't want to get a loan that doesn't give you enough capital to expand or accelerate. You also don't want to over-borrow and be stuck with huge monthly loan payments.
- Be specific about how it will be spent - Be clear about what all the money is earmarked for once you get the loan (employee salaries, necessary equipment, office space, etc.).
- Mention community impact - Be vocal about how your business will positive impact the community (planned jobs created, if you are revitalizing a vacant / old building, how you will give back to the community either through donated time or money, etc.).
- Revenue / Profit Projections - Many institutions will want to see your planned revenue and profit projects in intervals (6 months, 12 months, 3 year, 5 year). Keep in mind the further out you go the less accurate these numbers will be. However, do your due diligence and base it on industry information and research).