Business Plan Section 8: Funding Request
These guidelines will help you prepare a funding request to present to a potential lender alongside your loan application.
We’ve talked before about the benefits of having a business plan for every business, but the truth is, most companies don’t put one together until they want to apply for funding, whether from a bank or investor. Sometimes, even if you don’t need a full business plan when applying for a loan, you will be asked for a funding request. You can also follow the guidelines below to prepare a stand-alone proposal to present to a potential lender with your application.
If the purpose of your business plan is NOT to get funding, feel free to skip this section.
As we’ve said before about writing a business plan, it’s important to keep your audience in mind. You can certainly prepare different versions of your funding request depending on whether you’re applying for a loan or approaching an investor. The terms of each would be different, and you might be looking for different amounts of money or types of funding, especially if you’re approaching several potential partners.
Be clear about whom you’re directing the request to, and think about the questions they might have and what they would want to see. Make sure you’ve done your homework regarding the costs involved with your plans. This is where the financial section of your plan will work hand in hand with this one. Be consistent with your numbers, and ask for enough to cover your needs fully so you don’t fall short and remain unable to complete your goals. At the same time, don’t ask for more than you need.
What to Include in Your Funding Request
1. a summary of the business.
If the request is part of your business plan, you will have already put together all the information found in a business summary. If you’re creating a funding request as a stand-alone document, explain what the company is, where you’re located, what you sell or what services you offer, and who your customers are. Mention whether you’re incorporated, and if so, what type of corporation it is, along with who the owners and key staff members are. Briefly list your business successes and accomplishment thus far.
2. How much money you’re requesting
How much cash are you looking for now, and if you anticipate this being the first part of an ongoing growth plan, how much more money do you plan to request over time? What would the specific timeline look like? The Small Business Administration suggests thinking as far as five years down the road when putting your funding request together. Also spell out what type of funding you’re looking for, whether a loan or investment, and the terms you’re asking for. (As we suggested above, you can put together different versions of the request for different types of funding.)
3. What you will use the money for
Do you need some extra funds for working capital to buy more inventory? Are you paying off a high-interest loan? Buying a building, new equipment, or another company? Expanding your advertising campaign, or hiring more staff? Whatever it is, explain how much each aspect will cost.
4. Financial information
This will be the heart of the financial information section of your business plan , but you need to include it here if you’re putting together a stand-alone funding request.
You’ll need historical data on the company (if it’s an established business), like income statements, balance sheets, and cash flow statements for the last three to five years. If the funding request is for a loan that requires collateral, document what you have to offer. If you’ve invested your own money in the company or there are other investors, state that along with how much.
Offer realistic projections for the future, and explain how this new funding would help you reach those goals. Prepare yearly forecasts for income, balance sheets, cash flow and capital expenditure budgets for the next five years. Be even more specific for the first year, with projections for each month or quarter.
You also need to cover how you plan to pay off the debt, or what kind of return on investment you can offer a potential investor. Potential funders will pay particular attention to this, wanting to maximize their gains and minimize their risk as much as possible. If the plan is targeted to investors, what would their exit plan be? Can they cash out in a specific number of years? Do you plan to go public and offer stock?
Finally, address anything that might affect your ability to repay, whether positively or negatively, such as being acquired, buying out another business, relocating, etc.
Getting money to fund your business may very well be the point of creating your entire business plan, so take the time to carefully prepare your funding request, making sure to include all the information a decision-maker will need.
NEXT ARTICLE > BUSINESS PLAN SECTION 9: APPENDIX
Apply for a loan, get started.
Loans from $5,000 - $100,000 with transparent terms and no prepayment penalty. Tell us a little about yourself, your business and receive your quote in minutes without impacting your credit score.
Thanks for applying!
- Search Search Please fill out this field.
- Building Your Business
- Becoming an Owner
- Business Plans
How To Write the Funding Request for Your Business Plan
What goes into the funding request, parts of the funding request, important points to remember when writing your request, frequently asked questions (faqs).
MoMo Productions / Getty Images
A business plan contains many sections, and if you plan to seek funding for your business, you will need to include the funding request section. The good news is that this section of your business plan is only needed if you plan to ask for outside business funding. If you're not seeking financial help, you can leave it out of your business plan. There are a variety of ways to fund your business without debt or investors. Below, we'll cover how to write the funding request section of your business plan.
- The funding request section of your business plan is required if you plan to seek funding from a lender or investors.
- You'll want to include information on the business, your current financial situation, how the money will be used, and more.
- Tailor each funding request to the specific funding source, and make sure you ask for enough money to keep your business going.
The funding request section provides information on your future financial plans, such as when and how much money you might need. You will also include the possible sources you could consider for securing your funds, such as loans or crowdfunding. Later, you can update this section when you need outside funding again for business growth.
An Outline of the Business
Yes, you've done this already in past sections, but you want to give potential lenders and investors a recap of your business. In some cases, you might simply share the funding request section so you need to have your business details such as what you provide, information about your target market, your structure (i.e. LLC), owners' and members' information (for partnerships and corporations), and any successes you've had to date in your business.
Current Financial Situation
Again, you've provided some financial information in the financial data section , but it doesn't hurt to summarize. If you're submitting just the funding request, you'll need this information to help financial sources understand your money situation.
Provide financial details such as income and cash flow statements, and balance sheets in your funding request section.
Offer your projected financial information as well. If you're asking for a loan for which you'll be offering collateral, include information about the asset. If the business had debt, outline your plan for paying it off. Finally, share how you'll pay the loan or what sort of return on investment (ROI) investors can expect by investing in your business.
How Much Money Do You Need Now and in the Future?
Indicate what type of funding you're asking for such as a loan or investment. Outline what you need now and what you might need in the future as far as five years out.
How Will the Funds Be Used?
Detail how you'll be using the money, whether it's for inventory, paying a debt, buying equipment, hiring help, and more. If you plan to use the money for several things, highlight each and how much money will go to each.
Most financial sources would rather invest in things that grow a thriving business than things that pay for debt or overhead expenses.
Current and Future Financial Plans
Current and future financial plans include items such as loan repayment schedules or plans to sell the business. If you're getting a loan, outline your plans for repayment (although most lenders will have their own schedules). If you have plans to sell the business, let the lender know that and how it will affect them. Other issues to consider are relocation (if you move) or a buyout. Finally, let investors know how they can exit the deal, such as cashing out (and how long before they can do that).
You're asking for money, so you need to always be professional and know your business inside and out. Here are some other things to keep in mind:
- Tailor your funding request to each financial source : Lenders and investors need different information, such as loan repayment versus ROI, so create different reports for each.
- Keep your funding sources in mind : Each resource will have different questions and concerns. Do a little research so you can address them in your report.
- Ask for enough to keep your business going : Don't be stingy, as you don't want your business to fail from a lack of money. At the same time, don't be greedy, asking for more than you need.
How do you request funding for a nonprofit?
Most nonprofits seek funding in the form of grants. Write a grant proposal that includes information on the project or organization, preliminary budget needs, and more. Be sure to format it with a cover letter, proposal summary, the introduction of the organization, problem statement, objectives, methods, evaluation, future funding needs, and the budget.
What are three methods of funding?
Grants and scholarships, equity financing, and debt financing are the main three methods of funding for small businesses . Grants and scholarships do not need to be repaid and are often best for nonprofit organizations. Equity financing is when you receive money in exchange for ownership and profits. Debt financing is when you borrow money that needs to be repaid.
Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!
Small Business Administration. " Fund Your Business ."
Congressional Research Service. " How To Develop and Write a Grant Proposal ."
Library of Congress Research Guides. " Types of Financing ."
By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.
8 Steps to Securing Funding for Your New Business
So, you’ve got a great business idea but you don’t have the funds you need to make it a reality. We spoke to Indy Goraya, former investor at BGF , and now, business coach at ActionCoach , for his advice on securing funding for a new business.
You’ll firstly need to have a solid business plan to help decide how you’ll fund your business as this will affect how you structure and run everything.
Your business plan should include various elements , such as details of your marketing strategy (and other growth strategies), an analysis of your competitors, a development plan of your products or services, an assessment of target addressable markets, a team overview and operational and financial information.
Once you have a strong business plan ready to go, it’s time to start exploring your funding options.
Here are 8 important steps to help you secure the funding you need to kickstart your business.
1. Work out how much funding you’ll need
It may seem obvious but your business plan won’t be complete without a cohesive understanding of how much funding you need to enable you to launch or grow your business. Spend time working out your forecasts, KPIs and financial strategy – you will be quizzed in depth on this by anyone who is considering giving you investment. Assessing how much capital to raise requires an understanding of the company’s forecast financial performance, including those initiatives that funding will be used to accelerate. The business plan must include the use of funds, such as new hires, acquisitions, marketing, investment in technology, new premises, etc. If cash does not dip into negative territory, then funding may not be required at all, and it may be possible to fund the intended growth profile through cash and retained profits.
With these assumptions included, the cash flow will illustrate the amount of cash required, equal to the lowest negative balance. Add an appropriate amount of headroom to this figure as a safety net and then you can calculate the total funding requirement:
Funding Requirement (£) = Largest Negative Cash Balance (£) + Appropriate Headroom (£)
The British Business Bank go into more detail on areas to consider when determining how much funding you will need in this useful guide . You may need to get rough quotes from other companies who would be involved in supporting and offering services to your business (e.g website design agency, app development company, etc.)
2. Review your brand identity
Having a clear and visual brand identity will ensure you are in the best position to launch your business once you have secured funding, but it will also help you to communicate your vision to potential investors. This could be the key to securing funding or not, so consider using the expertise of a marketing agency or a freelancer if you don’t have the design skills in-house.
3. Determine whether self-funding is viable
Bootstrapping, or self-funding, is a combination of your own personal savings along with help from family and friends. Self-funding will mean you retain complete control over your business, but you will also be taking on all the risk, so be realistic and cautious with what you can afford. Understand that withdrawing from pension funds is often not advised as it could hinder your retirement age and will mean you are hit with a tax bill of 55% on what you withdrew – speak to a financial advisor before making a decision like this.
4. Secure venture capital from investors
Investors, either angel investors or investment companies, give funding to people looking to start or grow an existing business.
If going down the investor route, it is important to be aware that you will need to give up some portion of the control and ownership of your company in exchange for your funding, often in the form of shares in the company or with the expectation of financial return. Some investors will want to have an active position in your company, which may be in the form of a board member who helps to determine and review company goals or a business coach who helps you to achieve your potential through training and development.
You will need to approach the right investors for your business. Investment firm, Midven – one of Digital Glue’s clients – supports SMEs requiring up to £1m of investment in an initial fundraising round. Other VC firms may invest earlier than SME status, at the ideation stage of your company – for example, Simsan actively invest in pre-seed & seed startups.
Investors invest in companies with high-growth potential as they take greater risks – if the business fails, they lose their money (unlike a bank loan where the debt must still be paid back). They therefore seek higher returns to account for the additional risk.
5. Look into crowdfunding
Crowdfunding is a way of raising funds for your business through a wide group of people, AKA crowdfunders. They contribute financially to your business and, in return, expect a product or service from you, e.g. a crowdfunder who contributes to a new camera brand might expect a new camera once the fund has been raised and production is underway; a crowdfunder who contributes to a new events company might expect to be invited to their events .
Crowdfunding is a popular option for businesses seeking funds as you get to retain full control of your company, but if the business fails, you are mostly under no obligation to repay your crowdfunders (though this is not necessarily always the case so do check the terms and conditions of the crowdfunding platform you use).
6. Consider a business loan
To retain complete control of your business, you may want to apply for a business loan through a bank.
Most banks will expect you to have a strong business plan, a breakdown of your expenses – think set up costs, staffing costs, R&D costs, software management tools, web development, etc. – and your financial projections for the next three to five years. Knowing this will help you determine how much funding you’ll need (see step one) and also help the bank feel confident in giving you the loan. Be sure to check out various banks to ensure you get the best loan terms.
7. Research government grants and loans
There are a number of government grants and loans that may be applicable to help launch and grow your business. Through the ‘Start Up Loan’ scheme, you can apply for a loan of £500 to £25k to help start your business if you live in the UK, are over 18 and you have (or plan to start) a UK-based business that has been trading for less than 2 years. Do note that this is not a business loan, it is an unsecured personal loan, with an interest rate of 6% per year which must be repaid over a period of one to five years.
Another option which may be applicable depending on the type of business you are setting up is to seek a government grant through Innovate UK . They provide grants to businesses who are looking to develop innovative solutions, supporting the development of new approaches, across a range of technologies, in all sectors and industries. These include advanced manufacturing, artificial intelligence, digital, electronics, bioscience and advanced computing. You can find out more about the funds they are distributing here .
8. Hire in a business coach
To give your business the best possible chance of raising finance, consider hiring a coach who has sector experience and can guide you through the process. In many cases, the ability to secure funding to pursue your growth plans will enable you to achieve your personal and business goals, so it is important to give yourself the best possible chance to achieve this.
Having a coach or advisor on hand who can leverage their experience could be extremely valuable and save you a lot of time and clarity. An obstacle most entrepreneurs face when raising finance is managing the toll it has on their bandwidth, as they navigate growing and running the business at the same time. It’s no surprise that business performance does normally take a hit during a fundraise as the attention of the business owner is focused elsewhere.
A good business coach will be able to help guide you through the fundraising process. Following a successful raise, having them stay on board will give you the best possible chance of then executing your business plan.
There are many business coaches in the UK but it’s important to assess them and understand their experiences to ensure it has maximum impact on your business – e.g. Indy Goraya at ActionCOACH Birmingham , who has experience advising and investing in businesses, and now operates as a business coach.
With so many options available to help you launch and grow your business, it is essential to take time to work out which funding route is best for you. To do this, make sure your business plan and brand identity are strong. If you need support with the latter, we’d love to help – just drop us an email .
To read more exclusive tips and industry news, head to DG Insights now.
Spaces, 156 Great Charles Street Queensway,
Subscribe to our newsletter.
- First Name *
- Last Name *
- Email This field is for validation purposes and should be left unchanged.
- Skip to main content
- Accessibility information
Business guides listing
Using your business plan to raise finance.
This guide summarises what sections to include when preparing a business plan for raising finance.
Set out your business plan
What do you need to secure equity funding?
From the right business plan to selling the opportunity, watch our video with our finance expert, Laurence Jamieson, as he talks you through the process of raising equity investment.
It's so important to have a well-prepared business plan when you're looking to raise finance.
A business plan helps to sell the opportunity to invest in your business to potential funders. Therefore, it's crucial to have a compact and realistic plan that clearly communicates your company’s objectives, financial performance and strategy.
Your business plan should include the following sections:
Most funders will receive a large number of business plans from businesses so it's important that your plan stands out from the crowd.
A well-written executive summary is usually no more than four pages long. The goal is to encourage your potential funder to learn more about the opportunity to invest in your company.
The summary should include:
- Concise overviews of the main sections of the plan
- The business background and objectives
- Products and services
- Financial forecasts
- What funding you need
If a funder is unable to understand your business and its competitive advantages within a few pages, it is unlikely they will read the rest of the plan.
This section should give background information on your business, including current ownership and management and future plans and objectives.
This section is factual so it should be short. It should give the potential funder a sense of how your business has progressed with evidence of financial success
Products and markets
The products and markets section should give an overview of your products and/or services. It should convince a funder that your business has a substantial and lasting market.
Include detailed descriptions of all revenue streams. It's important to focus on any unique features of your product or service, comparing it with what is currently available on the market.
It's useful to spell out why customers will choose your product or service over your competitors'. A common mistake is not commenting on competitors.
Mention any patents and trademarks. It's also a good idea to talk about potential product expansion opportunities.
Potential funders may not be familiar with your business industry or sector, so you should include an overview of your markets and customers. Show that there is a real demand for your product or service.
At the end of this section, outline your company’s sales strategy. This should validate sales projections within your company’s financial forecasts.
Typical areas to cover include:
- Marketing strategy
- The sales process
- Route to market
- Advertising channels used
- The method of distributing the product/service to customers
The operations section describes how your company makes and prepares your product or service.
As a minimum, you should cover the following areas:
- Equipment and processes
By covering only the main details in each category, you would deal with initial questions without overwhelming potential funders with details.
Emphasise any patented technologies that give your business a competitive edge and highlight any other key advantages. You want to show your business can deliver its product or service to market while priced at a level that is enough to make an acceptable profit.
Potential funders will be interested in your business' facilities. Therefore give location details and the size of main operating units, and whether these are owned or leased.
If your company’s activities are reliant on key assets, provide their details, including a description of their function and age.
Management and employees
Management and employees can significantly influence a funder’s decision of whether or not to support a business. Show that you have a team, which has the necessary blend of technical, commercial and managerial experience.
Funders will look for the following core elements:
- If the team have the required skillset
- Their prior industry experience
- The personality fit of the team and their collective complementary skillset
- Evidence of a shared vision
- Their overall commitment
This section of the business plan should provide details of all key management personnel within the business, including their roles and areas of responsibility.
It should also give information on their skills and experience, plus details of the workforce.
Depending on the business size and its management structure, an organisation chart might be useful.
Financial summary and why you need funding
The financial summary should give a short evaluation of the financial performance of your company.
Funders need to be convinced that their risk in funding your business is at an acceptable level. One of their key measures will be the level of potential financial risk.
Therefore it's important that the financial information you give is realistic and would stand up to rigorous scrutiny.
Being able to quantify and justify your funding requirements is very important. The best way to do this is by preparing a detailed financial model.
As a minimum, include a profit and loss account, cash flow and balance sheet, ideally for a three-year forecast period, with commentary on key assumptions and outputs.
Helping potential funders make an informed decision
Remember that funders see a huge number of business plans and are very selective of what they will fund.
By making sure your business plan provides all the necessary information to help funders make an informed decision, you're giving yourself the best chance possible of getting funding.
Got a question about accessing finance?
Get in touch with our team of experienced financial readiness experts who can help you secure funding from a range of sources including bank funding, equity funding, and grants.
This guide was written by our investment team who work with Scottish businesses and UK and international investors.
On This Page
What are your business funding options?
Explore your funding options, small business funding templates.
Small Business Funding and Financing Options
Kody Wirth | Oct 27, 2023
When looking at your small business funding options you’ll typically do one of two things—take on business debt or offer up a portion of your business in the form of equity. While that may sound simple, there is unfortunately no one-size-fits-all funding method. Each option will have unique requirements, benefits, and drawbacks that you’ll need to consider.
Finding the right business financing really comes down to understanding your business needs . Why you need funding, how much you need, and how quickly are just the basics. The specific terms, type of debt, and potential requirements from lenders or investors should also guide your decision.
As you consider all of that, the best thing to do now is start exploring your options. And we have a guide, right here, to help you do just that.
While there are seemingly endless options for funding your business they can all be categorized within these eight categories.
Friends and family
Some of the most successful businesses in the world started off with money from friends and family. But you shouldn’t just ask and leave it at a handshake. You need a plan and documents that hold you both accountable.
Bootstrapping and self-funding
Every business owner will have to bootstrap at some point in time. This doesn’t mean starting with nothing. Instead, you’re using any and all personal resources to get your business up and running.
Applying for a small business loan from a bank or credit union is one of the most common and accessible funding options. Here we’ll cover how to apply, what to expect when pursuing a loan, and answer some common questi…
Despite the name, these are not direct loans from the SBA. Instead, they are more accessible loans from traditional banking institutions backed by the SBA. We’ll walk you through this program and how to rework your bus…
Venture capital and angel investors
This type of funding is often reserved for high-growth companies that display a promising potential return for the investor. In this guide, we’ll provide an overview of outside investment as well as specific tips for p…
Crowdfunding platforms are a great way to test out your business idea and see if there is real interest in what you have to offer. We’ll go over the basics of crowdfunding along with insights on how to use a few popula…
A small business grant is money awarded to a business with no repayment or portion of equity required. While often rare, unless you're in the agriculture or medical industries, they are more common for nonprofits.
Small business credit
Business credit is an often misunderstood aspect of starting and running a business. While yes, your business can build credit, the more important part is your own personal credit score and history.
Looking for a quick way to explore multiple funding and financing options within the eight categories listed above? Check out these guides where we list some of the top traditional and alternative funding options.
Which funding option should you choose?
With so many potential ways to fund your business which is the best for you? Check out this guide comparing the pros and cons of the core funding categories.
40 common ways to fund your business
Check out our growing list of funding options for small businesses. This guide is updated regularly to account for new funding opportunities that may be valuable for small businesses.
Top alternative funding options
Learn about the more unconventional funding methods available to small business owners. This guide is updated regularly to account for any emerging and nontraditional funding options.
The four tiers of small business financing
While there are multiple funding and financing options out there they can all be categorized under four distinct tiers based on availability, risk, and what they can be used for.
Fundraising in a crisis
You typically want to take on financing when your business is stable and looking to grow. However, there are times when a crisis hits and additional funding can help keep your business afloat. Here’s what you need to k…
Free resources to help you prepare to pursue multiple funding options.
Free business plan template
Be prepared to pursue any type of funding with an investor-ready and SBA-approved business plan.
Use LivePlan to prepare for any type of funding
Create and share your investor-ready plan, pitch, and financial forecasts with a single powerful tool.
Free investor pitch deck template
Impress investors and loan officers alike with visuals to back up your elevator pitch.
12 Min. Read
10 Reasons You Don’t Qualify for an SBA Disaster Loan
4 Min. Read
The Different SBA Loan Programs Explained
6 Min. Read
Examples of Great Patreon Profiles
3 Min. Read
9 Reasons Not to Crowdfund Your Next Project
The quickest way to turn a business idea into a business plan
Fill-in-the-blanks and automatic financials make it easy.
No thanks, I prefer writing 40-page documents.
Our biggest savings of the year
Cyber Sale Save 60%
for life on the #1 rated business plan software