Many companies see business loans as their financial lifeline. However, obtaining one has become more challenging than ever. In 2021, only 31% of businesses received their desired loan amount from traditional financers, compared to 51% two years prior.
Lenders nowadays often ask for many requirements to ensure they will finance a business prepared for different risks or challenges. One of these requirements is a well-crafted business plan that outlines the company’s objectives and strategic roadmap. It can increase an organization’s chances of impressing lenders and securing a business loan. Because of its significance, making one can be intimidating.
Read on as we discuss how to make a business plan to help you secure a loan for your enterprise.
Understanding a Business Plan: Purpose and Key Elements
A business plan is a comprehensive document outlining a company’s goals, operational strategies, and financial projections. It serves as a roadmap for achieving success and guides companies in determining their funding needs for business expansion. It consists of different components, such as:
- Executive summary – A concise overview of the entire business plan.
- Company description – An introduction to the company, including its registered name, address, key stakeholders, structure, history, and nature.
- Market analysis – A study of the company’s target audience, industry landscape, competitors, and market trends.
- Product/service details – A list of the company’s products and services, including their features, prices, and benefits.
- Organizational structure – An outline of the management team, key personnel, and their roles and responsibilities.
- Financial projections – A description of the company’s projected revenue, expenses, profit margins, cash flow, and break-even analysis.
- Marketing strategy – An outline of how you plan to effectively market your offerings, attract customers, and achieve revenue goals.
- Exit strategy – A plan describing the company’s preparedness for mergers and acquisitions, bankruptcy, closures, and other business challenges.
- Appendix – A list of additional information readers may need to comprehend the business thoroughly.
With this essential data, lenders can assess a company’s creditworthiness, character, repayment capacity, working capital, success potential, and collateral. A business plan also helps companies attract skilled executives who can help them overcome other financial challenges and significantly contribute to their long-term growth.
How to Make a Good Business Plan: A Step-by-Step Guide
If you’re making a business plan for the first time, you must understand that it’s not as easy as it sounds. It requires a lot of time and attention as it will give lenders a complete picture of your business and your ability to succeed. Here are the specific steps for writing a business plan for a loan.
1. Define your business goals and objectives
Just as you wouldn’t purchase a business tool with no potential return on investment, lenders will likely reject your loan application if you don’t have a clear roadmap for your business. As such, clearly articulate your short- and long-term goals to show you have a clear vision and direction for your company.
For instance, if you’re a technology company, you can specify that your short-term goal is to secure at least 50 local clients for a new software product within a year. You can also share that your long-term goal is to position your company as a leader in the software development industry within five years, serving local and international clients.
2. Conduct market research and competitive analysis
Lenders also want to know who you want to serve and how you plan to stand out in your industry. Thoroughly research your target market, customer demographics, industry trends, and competitive landscape to help lenders understand the market potential and your competitive advantage.
You can also include a strengths, weaknesses, opportunities, and threats (SWOT) analysis to show lenders your understanding of your business’s current and potential standing.
3. Outline your products or services
Describe your offerings to help lenders assess the market demand for your products or services. Some details you can put in this section include the following:
- Product and service features and benefits
- Pricing model
- Customer base
- Supply chain and order fulfillment strategy
- Sales and distribution strategy
- Suppliers and materials
- Trademarks, patents, and other intellectual property rights (if applicable)
- Completed or planned research and development efforts (if applicable)
4. Prepare financial projections and funding requests
Create financial projections for three to five years, as any further out would make it more difficult for lenders to assess your company’s standing and potential. Your financial projections should include your revenue and expense, as well as your cash flow forecasts, capital expenditure budgets, and balance sheets.
You should analyze these projections based on key financial metrics such as net profit margin, current ratio, and accounts receivable turnover ratio.
Additionally, determine your required funding and clearly explain how you will use the funds to support business growth.
5. Review and refine your business plan
Once you’ve supplied the essential information about your company, thoroughly review and refine your business plan to ensure it’s accurate, up-to-date, and aligned with your goals. Ensure it’s clear, concise, and persuasive to lenders.
Succeed with the Right Financial Support
Running a business can be challenging, especially if you don’t have the funds to sustain your operations. However, to secure a loan, you need a solid business plan to support your application. Refer to the business plan step-by-step guide above to get you in any lender’s graces.
Remember to stay confident and transparent when you’re ready to present your business plan. Lenders will approve your application, knowing you’re stable enough to use and repay the loan properly.
For fast and convenient financial assistance, look no further than Zenith Capital, one of the top online lending companies in the Philippines. Our streamlined process ensures that business loan applications are processed within three to five business days, providing timely financial support to SMEs and corporations nationwide.
With loan amounts of up to 50 million available without collateral, we offer the flexibility needed for companies to expand and succeed in their respective industries.
Rizza Templonuevo is not just an accomplished finance professional and business leader, but also a loving wife and a dedicated mother of two. With a passion for helping businesses grow and thrive, she brings her extensive knowledge and expertise as Vice President of Zenith Capital Credit Group Corporation to help countless SMEs and corporations across the Philippines access the financing they need to succeed.
When she’s not busy with work, Rizza enjoys immersing herself in the worlds of fashion and social events, as well as traveling to new and exciting places.