When you apply for a working capital loan, you will need thorough documentation detailing your business operations and financials, including a business plan. Lenders often require a business plan if you’re a new business or applying for a significant amount of money. Even if they don’t, having a clear plan for your company can dramatically improve your chances of approval.
A strong business plan tells your story in a way that builds confidence and highlights your potential. The effort you put into your plan shows lenders that you have a strategy for growing your company and a roadmap for repayment.
Whether you’re putting together a plan for the first time or updating one to support a new funding request, here’s how to write it to impress your lender.
Executive Summary
Make a confident first impression with a straightforward executive summary. As the first thing lenders read, it sets the tone for your entire business plan. In a few paragraphs, you should summarize who you are, what your business does, what you’re asking for, and why you need funding.
Position your financing request as a logical next step for your business. Don’t bury the purpose of the loan or make the reader hunt for it. If you request a salon business loan for $100,000 to expand your operations, summarize how your clients are booking massage and pedicure services months in advance. Investing funds in a new massage room, pedicure table, and additional specialists logically builds on your success.
Make your business plan stand out by showing how financing fits into the big picture. Clearly state your funding request, how it connects to your company’s history, and how it impacts future growth. Your executive summary should show your lender how a loan makes sense, and it’s only the first section of your plan.
Company Overview
Now you get into the foundations of your company. This section can be longer than the executive summary, but it is still an overview of relevant information about your business. Don’t get bogged down in too many details.
Include information about:
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- What your company does
- Where your business operates
- What drives your business (mission statement or purpose)
- What qualifications and skills your management have
- Who owns the business and how you structure leadership
- What the owners’ backgrounds and expertise are
- Who your business serves and where they live
- How long you have been in business
- What you have accomplished during your time in business
- What makes your business unique
Lenders want to know why your business is a good investment. Highlight your strengths in this section. For example, describe how you doubled your revenue last year or hired a CEO with unique leadership skills. Let your business shine.
Market Analysis
In the market analysis section, prove there is a demand for your product or services. Lenders need to know there’s a healthy market and that you understand how to work within the existing competition.
Start by researching market size, growth trends, and consumer behavior. Use your numbers or cite reputable sources to put the whole picture concretely. If local surveys say mountain tourism has increased by 15% in the past year, you can prove there is a market for your Colorado hotel to expand.
Identify your target customer and other businesses competing for their attention. Explain how you meet customer needs differently from your competitors. Are you faster? More affordable? Do you offer a niche product no one else provides?
If you operate a cleaning service in a growing tourist area and your ideal customer is an owner of several short-term rentals, point to recently built rental homes and the number of listings on vacation sites to highlight local demand. Mention similar services in the area, then focus on how you are cleaning residences between check-out and check-in windows or offering more affordable prices for contracted clients.
Be thorough, even if it takes several pages. Lenders in your industry and region will be aware of economic factors influencing your business. Show you understand your industry, customers, and competition in your market analysis.
Products and Services
Earlier parts of the business plan describe your products or services, but this section should provide a detailed breakdown. List everything you sell or provide, what you charge, and how those offerings generate revenue. Consider a bulleted list or informational table rather than a written paragraph.
Include any new products or services you plan to introduce, like using restaurant financing to add catering services. Explain the pricing model, expected demand, and how this new service fits your operations. Maybe you plan to provide catering for local events on evenings and weekends. By charging based on crowd size, urgency, and specialty orders, you plan on a 12% profit from each event and selling unused goods at day-old prices in the shop the next day.
After your lists of products and services, explain how you offer value to your customers and how you make a profit. Share your recent sales history to show your results. Then be specific about how you plan to scale your company with the help of financing. Lenders want a logical link between the loan and your ability to generate more revenue.
Impress your lender using market research and sales history data in this section. Use the numbers to support your current pricing and sales projections and show you have thought this through.
Marketing and Sales Strategy
Offering great products or services is only the first part of a sale. The second part is getting your offerings into customers’ hands. Every business plan should include details about your current marketing strategies, like:
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- Advertising efforts
- Online presence
- Loyalty programs
- Customer retention strategies
- Referral programs
- Partnerships
- Target audiences
- Preferred platforms
- Measurable results
Include how financing will impact your sales efforts. If you’re borrowing to expand your business into a new market, explain how you’ll raise awareness and build credibility there. Or if a loan is to launch your digital marketing campaign, describe your intended platforms, target audience, and expected results.
Focusing on profit will make your business plan stand out. A small business does not need to have a million different marketing strategies. Paper flyers at local events or videos on social media count if they effectively attract customers. Use this section to show how your strategy results in sales.
Operations Plan
In this section, demonstrate how your business runs. Outline your business’s day-to-day mechanics, including your location, staffing, equipment, management systems, suppliers, and workflow. Demonstrate operational stability to build lender confidence in your ability to grow.
Include how operational changes from a loan will improve efficiency or output. For example, funding to add a second shift in your warehouse will allow you to double your order volume and increase your revenue.
Lenders want to know you’re organized and efficient. Highlight your systems, like an automatic deduction for rent or your monthly budget review with your accountant, to show how your daily operations support your ability to repay the loan.
Financial Projections
In this section, you prove you can repay the loan with detailed financial forecasts for the next 12 to 36 months. Your projection should reflect your current performance. It should cover:
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- Historical financials
- Projected income statements (revenue and expenses)
- Cash flow forecasts
- Balance sheets
- Assumed sales growth
- Seasonal variations
- Financing impact
These projections should reflect your current performance and show how the loan will impact future growth. Include three to six months of business bank statements or profit and loss reports to illustrate your financial health. Use that data to support key assumptions about your projections’ growth and the loan’s impact. If you’re asking for $75,000, show how that investment earns you more than the loan amount.
Lenders know the difference between wishful thinking and reality. Thoroughly address all your financial information and don’t inflate numbers. A feasible business plan is more convincing.
Loan Request
Spell out how much funding you need and what you’ll do with it in this section. Break down how your business will spend the money. If you need $50,000 to grow your operations, explain how you plan to invest $15,000 in a new delivery van, $20,000 in a local ad campaign, and $15,000 to hire two drivers to expand your delivery service.
Take the opportunity to state your preferred loan terms, such as repayment schedule, collateral, or desired interest rate. Maybe you’d like a nine-month repayment term to capitalize on seasonal business, or you can offer existing equipment to secure a better interest rate. The lender might have standard offerings that don’t match your ideal financing, but this shows you understand your needs.
Make your loan request stand out by including details about current financing trends or details from the lending company. You could point out that you have a better credit score than the one required on their website, or that you are open to a business line of credit or credit card. Do your homework and show them you are well informed and prepared.
Worth the Effort
Whether you’re just starting or planning your next growth phase, building a solid business plan will put you ahead of the curve for running your business and financing. We get that it takes a lot of time and effort, but it shows professionalism, preparation, and confidence—qualities that never fail to impress a lender.
Infographic
A strong business plan is crucial when applying for a working capital loan, as it can sway a lender’s decision. Whether it’s your first plan or an update for new funding, this infographic offers tips to help you impress your lender.
