5 Loan Worthy Tips to Writing a Business Plan Banks Can’t Resist

Getting your business the capital it needs to thrive is important. Banks finance most successful businesses, and that much needed capital hinges on your business plan. It is important to understand that banks aren’t interested in investing in your company, but they do want timely returns on a successful loan.

The run of the mill bank loan for businesses is debt financing. The process is simple; you accept a loan from a bank, and pay it back. This can be via installments of principal and interest, or interest and balloon payment on the principal.

The best part about debt financing is that you remain sole proprietor of your business. This is what makes bank loans for business growth and success optimal for entrepreneurs not wanting to give up any equity in their innovative vision.

How do you ensure you get the bank loan? With a powerful business plan filled with confidence that the institution will in fact see the loan paid back in full, and on time. From cash flow to cosigners, here are five business plan must-haves for your next loan.

1. Cash On-Hand

When it comes to writing a business plan for a bank loan, documented cash on-hand is a key detail. Showing you have enough cash flow to repay the loan’s principal and interest will go a long way.

Future cash flow is great, but when writing your business plan, it is important to show income statements dating back a few years. Tax returns are also useful for showing enough cash flow as well.

2. Add Your Marketing Strategy

Marketing strategies have become very important to add in when you write a business plan. Not something a traditional loan officer would look at, marketing plans are vital to landing a business loan in the digital era.

What do you include in your marketing strategy? Banks want to see a number of risk data, including buyer habits, competitor analysis, and other market related risks. By listing risks and options for mitigating them, you add confidence to your business plan that will go a long way during the loan process.

3. Collateral is Important

Sure, having collateral in mind when you write your business plan is important. However, collateral is especially important for new businesses and business owners dealing with new banks.

What kind of collateral do you need in your business plan? Pretty much any assets the bank can seize and sell to recoup the money they lent you. This could be inventory, business equipment, and in most cases your home or personal property.

If you have collateral to put on the table, banks know you are serious and you are taking a big risk. This risk may drive you to succeed and pay back your loan, and banks like to see you wiling to take that risk.

4. Boast Your Management Skills

Would you lend money to someone who is historically bad at managing money? Probably not, and banks see it the same way.  Writing about your management skills can add that personal touch that banks like to read about in a business plan.

This can include your professional experience in your industry. If you helped manage a company that was successful, your stock will rise in the bank’s eyes. This is common for entrepreneurs that have gained skills and knowledge in an industry, and they are ready to start their own company.

5. Co-Signer Option

This may not be best for you or your potential co-signer, since business is risky, especially for new companies, but still worthy to write into your business plan. This is common for co-founders, or young entrepreneurs who don’t have the proven track record or collateral yet.

Getting bank financing is perfect for new enterprises and eager entrepreneurs. It is also a great way for already successful small to medium businesses to expand or franchise.

However, knowing how big of a business loan you need can be challenging. It is important to crunch the numbers and decide what you need to succeed and add 10 to 20 percent for wiggle room. After all, things never go as planned when starting or expanding a business.

Time to Write a Business Plan Banks Can’t Resist

The old saying is certainly true; banks tend to loan to those who really don’t need the money. If you show you are cash rich, have suitable collateral, and your industry expertise is exceptional, your loan will most likely get approved without issue. How do you plan on funding your business in 2018?