business plan for small business loan

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Your Guide to Writing a Business Plan

If you’re starting a new business, then you need an effective plan. Not only does this enable you to plan your company, but it also gives potential clients an insight into how your business works. A business plan is also vital if you want to attract investors or secure a loan from the bank. Drafting a business plan is a complex process, but it doesn’t have to be. This guide will ensure you create a definite plan to impress investors and clients. 

When creating your business plan, there are some essential elements you must include. The Executive Summary provides a description of your business, and what you hope to achieve. People usually write at least one page, but leave their Executive Summary until last.

You’ll also need to detail what your business offers and define your target audience. This makes it easier for people to see whether your company has a chance of succeeding. The opportunity section is also an excellent way for you to see what competitors offer and how you can create a USP to stand out from the competition. 

Appealing to Investors

Every business that wants growth and prosperity must ensure they promote themselves to potential investors. Business plans aren’t just about what the business is, but who is part of it too. Detail your current team members and explain what they bring to the company. Investors want to know they’re making a wise investment.

Your current finances and financial forecast are also essential aspects of your business plan. Look at your products, how much you’re selling them for and what kind of profit margin you expect to gain. It’s also vital you detail your outgoings and look at how various economic situations could affect your finances. 

Writing a Winning Executive Summary

There are problems in every market, and a successful business solves that problem. If you can show how you’ll be able to offer solutions in your business plan, you’ll appeal to investors. Choose your target audience based on research and ensure you show your research. There are many ways to conduct market research including defining SOMs, SAMs and TAMs. 

TAM stands for Total Available Market and comprises everyone you want your product to reach. Your Segmented Addressable Market (SAM) is a specific portion of the market you’ll target. This is important because it shows you’re able to direct your product at the right people and not just everyone. Your SOM (Share of the Market) is what you feel you’ll gain with your product.  

How to Determine Pricing

Pricing your product is one of the most challenging things you’ll have to do. There are many things to consider, such as how much it’s worth and making sure you don’t charge unrealistically. Many new businesses believe undercharging is the best way to go, but doing this can undermine your company’s authority and cause fewer people to be interested in investing.

Market-based pricing involves looking at your competitors and evaluating their prices. Which company has the most customers? How does their pricing match others? These are all vital aspects you should consider. Remember, customers expect quality and a fair price, so make sure you combine the two. 

Future Goals

Investors and banks want to know that you’ve considered what the future will hold for your company. When you write your business plan, be sure to take into account how you see the company growing, what you’ll do to ensure it thrives and that you understand the potential risks. Banks and investors want to know that you can build a business and are aware of the obstacles you’ll have to overcome.

Starting your own business doesn’t have to be difficult. If you ensure you produce a robust business plan, it can be an exciting process. Your business is part of your future, so start by outlining your goals and look forward to seeing results. 

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How to Write a Successful Business Plan for a Loan

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Table of Contents

What does a loan business plan include?

What lenders look for in a business plan, business plan for loan examples, resources for writing a business plan.

A comprehensive and well-written business plan can be used to persuade lenders that your business is worth investing in and hopefully, improve your chances of getting approved for a small-business loan . Many lenders will ask that you include a business plan along with other documents as part of your loan application.

When writing a business plan for a loan, you’ll want to highlight your abilities, justify your need for capital and prove your ability to repay the debt. 

Here’s everything you need to know to get started.

How Much Do You Need?

A successful business plan for a loan describes your financial goals and how you’ll achieve them. Although business plan components can vary from company to company, there are a few sections that are typically included in most plans.

These sections will help provide lenders with an overview of your business and explain why they should approve you for a loan.  

Executive summary

The executive summary is used to spark interest in your business. It may include high-level information about you, your products and services, your management team, employees, business location and financial details. Your mission statement can be added here as well.

To help build a lender’s confidence in your business, you can also include a concise overview of your growth plans in this section.

Company overview

The company overview is an area to describe the strengths of your business. If you didn’t explain what problems your business will solve in the executive summary, do it here. 

Highlight any experts on your team and what gives you a competitive advantage. You can also include specific details about your business such as when it was founded, your business entity type and history.

Products and services

Use this section to demonstrate the need for what you’re offering. Describe your products and services and explain how customers will benefit from having them. 

Detail any equipment or materials that you need to provide your goods and services — this may be particularly helpful if you’re looking for equipment or inventory financing . You’ll also want to disclose any patents or copyrights in this section.

Market analysis

Here you can demonstrate that you’ve done your homework and showcase your understanding of your industry, current outlook, trends, target market and competitors.

You can add details about your target market that include where you’ll find customers, ways you plan to market to them and how your products and services will be delivered to them.

» MORE: How to write a market analysis for a business plan

Marketing and sales plan

Your marketing and sales plan provides details on how you intend to attract your customers and build a client base. You can also explain the steps involved in the sale and delivery of your product or service.

At a high level, this section should identify your sales goals and how you plan to achieve them — showing a lender how you’re going to make money to repay potential debt.

Operational plan

The operational plan section covers the physical requirements of operating your business on a day-to-day basis. Depending on your type of business, this may include location, facility requirements, equipment, vehicles, inventory needs and supplies. Production goals, timelines, quality control and customer service details may also be included.

Management team

This section illustrates how your business will be organized. You can list the management team, owners, board of directors and consultants with details about their experience and the role they will play at your company. This is also a good place to include an organizational chart .

From this section, a lender should understand why you and your team are qualified to run a business and why they should feel confident lending you money — even if you’re a startup.

Funding request

In this section, you’ll explain the amount of money you’re requesting from the lender and why you need it. You’ll describe how the funds will be used and how you intend to repay the loan.

You may also discuss any funding requirements you anticipate over the next five years and your strategic financial plans for the future.

» Need help writing? Learn about the best business plan software .

Financial statements

When you’re writing a business plan for a loan, this is one of the most important sections. The goal is to use your financial statements to prove to a lender that your business is stable and will be able to repay any potential debt. 

In this section, you’ll want to include three to five years of income statements, cash flow statements and balance sheets. It can also be helpful to include an expense analysis, break-even analysis, capital expenditure budgets, projected income statements and projected cash flow statements. If you have collateral that you could put up to secure a loan, you should list it in this section as well.

If you’re a startup that doesn’t have much historical data to provide, you’ll want to include estimated costs, revenue and any other future projections you may have. Graphs and charts can be useful visual aids here.

In general, the more data you can use to show a lender your financial security, the better.

Finally, if necessary, supporting information and documents can be added in an appendix section. This may include credit histories, resumes, letters of reference, product pictures, licenses, permits, contracts and other legal documents.

Lenders will typically evaluate your loan application based on the five C’s — or characteristics — of credit : character, capacity, capital, conditions and collateral. Although your business plan won't contain everything a lender needs to complete its assessment, the document can highlight your strengths in each of these areas.

A lender will assess your character by reviewing your education, business experience and credit history. This assessment may also be extended to board members and your management team. Highlights of your strengths can be worked into the following sections of your business plan:

Executive summary.

Company overview.

Management team.

Capacity centers on your ability to repay the loan. Lenders will be looking at the revenue you plan to generate, your expenses, cash flow and your loan payment plan. This information can be included in the following sections:

Funding request.

Financial statements.

Capital is the amount of money you have invested in your business. Lenders can use it to judge your financial commitment to the business. You can use any of the following sections to highlight your financial commitment:

Operational plan.

Conditions refers to the purpose and market for your products and services. Lenders will be looking for information such as product demand, competition and industry trends. Information for this can be included in the following sections:

Market analysis.

Products and services.

Marketing and sales plan.

Collateral is an asset pledged to a lender to guarantee the repayment of a loan. This can be equipment, inventory, vehicles or something else of value. Use the following sections to include information on assets:

» MORE: How to get a business loan

Writing a business plan for a loan application can be intimidating, especially when you’re just getting started. It may be helpful to use a business plan template or refer to an existing sample as you’re going through the draft process.

Here are a few examples that you may find useful:

Business Plan Outline — Colorado Small Business Development Center

Business Plan Template — Iowa Small Business Development Center

Writing a Business Plan — Maine Small Business Development Center

Business Plan Workbook — Capital One

U.S. Small Business Administration. The SBA offers a free self-paced course on writing a business plan. The course includes several videos, objectives for you to accomplish, as well as worksheets you can complete.

SCORE. SCORE, a nonprofit organization and resource partner of the SBA, offers free assistance that includes a step-by-step downloadable template to help startups create a business plan, and mentors who can review and refine your plan virtually or in person.

Small Business Development Centers. Similarly, your local SBDC can provide assistance with business planning and finding access to capital. These organizations also have virtual and in-person training courses, as well as opportunities to consult with business experts.

Business plan software. Although many business plan software platforms require a subscription, these tools can be useful if you want a templated approach that can break the process down for you step-by-step. Many of these services include a range of examples and templates, instruction videos and guides, and financial dashboards, among other features. You may also be able to use a free trial before committing to one of these software options.

A loan business plan outlines your business’s objectives, products or services, funding needs and finances. The goal of this document is to convince lenders that they should approve you for a business loan.

Not all lenders will require a business plan, but you’ll likely need one for bank and SBA loans. Even if it isn’t required, however, a lean business plan can be used to bolster your loan application.

Lenders ask for a business plan because they want to know that your business is and will continue to be financially stable. They want to know how you make money, spend money and plan to achieve your financial goals. All of this information allows them to assess whether you’ll be able to repay a loan and decide if they should approve your application.

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Why Do I Need a Business Plan?

Sections of a business plan, the bottom line.

• Small Business

How to Write a Business Plan for a Loan

How to secure business financing

Matt Webber is an experienced personal finance writer, researcher, and editor. He has published widely on personal finance, marketing, and the impact of technology on contemporary arts and culture.

A business plan is a document that explains what a company’s objectives are and how it will achieve them. It contains a road map for the company from a marketing, financial, and operational standpoint. Some business plans are more detailed than others, but they are used by all types of businesses, from large, established companies to small startups.

If you are applying for a business loan , your lender may want to see your business plan. Your plan can prove that you understand your market and your business model and that you are realistic about your goals. Even if you don’t need a business plan to apply for a loan, writing one can improve your chances of securing finance.

Key Takeaways

• Many lenders will require you to write a business plan to support your loan application.
• Though every business plan is different, there are a number of sections that appear in every business plan.
• A good business plan will define your company’s strategic priorities for the coming years and explain how you will try to achieve growth.
• Lenders will assess your plan against the “five Cs”: character, capacity, capital, conditions, and collateral.

There are many reasons why all businesses should have a business plan . A business plan can improve the way that your company operates, but a well-written plan is also invaluable for attracting investment.

On an operational level, a well-written business plan has several advantages. A good plan will explain how a company is going to develop over time and will lay out the risks and contingencies that it may encounter along the way.

A business plan can act as a valuable strategic guide, reminding executives of their long-term goals amid the chaos of day-to-day business. It also allows businesses to measure their own success—without a plan, it can be difficult to determine whether a business is moving in the right direction.

A business plan is also valuable when it comes to dealing with external organizations. Indeed, banks and venture capital firms often require a viable business plan before considering whether they’ll provide capital to new businesses.

Even if a business is well-established, lenders may want to see a solid business plan before providing financing. Lenders want to reduce their risk, so they want to see that a business has a serious and realistic plan in place to generate income and repay the loan.

Every business is different, and so is every business plan. Nevertheless, most business plans contain a number of generic sections. Common sections are: executive summary, company overview, products and services, market analysis, marketing and sales plan, operational plan, and management team. If you are applying for a loan, you should also include a funding request and financial statements.

Let’s look at each section in more detail.

Executive Summary

The executive summary is a summary of the information in the rest of your business plan, but it’s also where you can create interest in your business.

You should include basic information about your business, including what you do, where you are based, your products, and how long you’ve been in business. You can also mention what inspired you to start your business, your key successes so far, and your growth plans.

Company Overview

In this section, focus on the core strengths of your business, the problem you want to solve, and how you plan to address it.

Here, you should also mention any key advantages that your business has over your competitors, whether this is operating in a new market or a unique approach to an existing one. You should also include key statistics in this section, such as your annual turnover and number of employees.

Products and Services

In this section, provide some details of what you sell. A lender doesn’t need to know all the technical details of your products but will want to see that they are desirable.

You can also include information on how you make your products, or how you provide your services. This information will be useful to a lender if you are looking for financing to grow your business.

Market Analysis

A market analysis is a core section of your business plan. Here, you need to demonstrate that you understand the market you are operating in, and how you are different from your competitors. If you can find statistics on your market, and particularly on how it is projected to grow over the next few years, put them in this section.

Marketing and Sales Plan

Your marketing and sales plan gives details on what kind of new customers you are looking to attract, and how you are going to connect with them. This section should contain your sales goals and link these to marketing or advertising that you are planning.

If you are looking to expand into a new market, or to reach customers that you haven’t before, you should explain the risks and opportunities of doing so.

Operational Plan

This section explains the basic requirements of running your business on a day-to-day basis. Your exact requirements will vary depending on the type of business you run, but be as specific as possible.

If you need to rent office space, for example, you should include the cost in your operational plan. You should also include the cost of staff, equipment, and any raw materials required to run your business.

Management Team

The management team section is one of the most important sections in your business plan if you are applying for a loan. Your lender will want reassurance that you have a skilled, experienced, competent, and reliable senior management team in place.

Even if you have a small team, you should explain what makes each person qualified for their position. If you have a large team, you should include an organizational chart to explain how your team is structured.

Funding Request

If you are applying for a loan, you should add a funding request. This is where you explain how much money you are looking to borrow, and explain in detail how you are going to use it.

The most important part of the funding-request section is to explain how the loan you are asking for would improve the profitability of your business, and therefore allow you to repay your loan.

Financial Statements

Most lenders will also ask you to provide evidence of your business finances as part of your application. Graphs and charts are often a useful addition to this section, because they allow your lender to understand your finances at a glance.

The overall goal of providing financial statements is to show that your business is profitable and stable. Include three to five years of income statements, cash flow statements, and balance sheets. It can also be useful to provide further analysis, as well as projections of how your business will grow in the coming years.

What Do Lenders Look for in a Business Plan?

Lenders want to see that your business is stable, that you understand the market you are operating in, and that you have realistic plans for growth.

Your lender will base their decision on what are known as the “five Cs.” These are:

• Character : You can stress your good character in your executive summary, company overview, and your management team section.
• Capacity : This is, essentially, your ability to repay the loan. Your lender will look at your growth plans, your funding request, and your financial statements in order to assess this.
• Capital : This is the amount of money you already have in your business. The larger and more established your business is, the more likely you are to be approved for finance, so highlight your capital throughout your business plan.
• Conditions : Conditions refer to market conditions. In your market analysis, you should be able to prove that your business is well-positioned in relation to your target market and competitors.
• Collateral : Depending on your loan, you may be asked to provide collateral , so you should provide information on the assets you own in your operational plan.

How Long Does It Take to Write a Business Plan?

The length of time it takes to write a business plan depends on your business, but you should take your time to ensure it is thorough and correct. A business plan has advantages beyond applying for a loan, providing a strategic focus for your business.

What Should You Avoid When Writing a Business Plan?

The most common mistake that business owners make when writing a business plan is to be unrealistic about their growth potential. Your lender is likely to spot overly optimistic growth projections, so try to keep it reasonable.

Should I Hire Someone to Write a Business Plan for My Business?

You can hire someone to write a business plan for your business, but it can often be better to write it yourself. You are likely to understand your business better than an external consultant.

Writing a business plan can benefit your business, whether you are applying for a loan or not. A good business plan can help you develop strategic priorities and stick to them. It describes how you are going to grow your business, which can be valuable to lenders, who will want to see that you are able to repay a loan that you are applying for.

U.S. Small Business Administration. “ Write Your Business Plan .”

U.S. Small Business Administration. “ Market Research and Competitive Analysis .”

U.S. Small Business Administration. “ Fund Your Business .”

Navy Federal Credit Union. “ The 5 Cs of Credit .”

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How to write a business plan for a bank loan?

Whether you need a bank loan to start up a new business, grow an existing business or anything in between, writing a business plan can help make it a reality!

It involves outlining your goals and explaining how you plan to achieve them. A professional business plan is crucial to obtaining a bank loan and planning your outlook for both the short and long-term future.

Yet, most entrepreneurs view writing a business plan as a daunting task. But, it doesn't have to be!

In this guide, we'll cover what writing a business plan for a bank loan entails, why you need to write one, what tool you should use and the content that should be included.

Ready? Let's get started!

In this guide:

What is a business plan?

Do i need a business plan to secure a business loan, do banks actually look at business plans or is it just a box-ticking exercise, what do banks look for in a business plans, what tool should i use to write a business plan for a bank loan, what does a business plan for a bank loan look like, how long does a business plan for a bank loan need to be, key financial metrics and ratios banks look at when deciding on a loan application, examples and templates of business plans for a bank loan.

A business plan is a written document that contains two key parts:

• A written presentation that outlines what the company does, its medium term objectives and explains how it plans to achieve them.
• A financial plan that includes a cash flow statement, profit and loss statement and a balance sheet.

To get a business loan approved you need to convince the lender that your business will be able to repay it.

Regulated lenders also have legal obligations to demonstrate to their regulator that they are lending responsibly, meaning that your business can afford the loan.

Therefore, whilst a business plan is not strickly necessary to obtain a business loan, most banks will likely ask you to provide one, as it provides an objective way of assessing your borrowing capacity and to demonstrate affordability.

Imagine the following situation, a business borrows £100k from a regulated bank, and then goes bust. The regulator decides to investigate the bank. The bank can then provide the business plan to help demonstrate that the loan was affordable and that it behaved responsibly.

Most banks will look at your business plan when you hand in a loan application. How in-depth the bank looks at it though will depend on whether you are borrowing against assets or cash flow.

Asset-based lending

Borrowing against assets involves lending money to businesses whilst using their assets as collateral. These loans are also called secured loans.

Secured loans help reduce risks for lenders, they can seize the collateral if the borrower is unable to repay and sell the asset to recoup part of their losses. That's what happens with mortgages, for example.

Banks usually have pre-set loan-to-value ratios (LTVs) for the most common types of assets (property, equipment, vehicles etc.).

A loan-to-value assessment simply compares the appraised value of your asset against the value of the business loan.

For example, if you're buying a car worth £10,000 and the LTV ratio used by the bank is 70%, they can lend you up to £7,000 and will take the car as collateral.

The bank still needs to assess that you can afford the £7,000 business loan. They might ask you for a business plan, but might decide not to do so given that it's a small amount. They might simply look at your trading history or ask for a personal guarantee from the business owner instead.

BDC Bank - a Canadian bank - says that "financial institutions don’t use the same loan-to-value ratio for all asset types because of different asset liquidity levels".

In layman terms, liquidity means how easy it is to sale the asset. If it's a delivery van, it's very easy as there is an established secondhand market (high liquidity), if it's a chemical plant it might take up to a year (low liquidity).

In a nutshell, the easier it is to sale the asset (if it needs to be seized), the higher the loan amount.

According to BDC Bank , likely LTV ratios for common asset types are:

• Marketable securities (high in liquidity): 90%
• Accounts receivables: 75%
• Commercial and industrial real estate: 65% to 100%
• Inventory (low in liquidity): 50%.

Capital Source Group - an alternate lender - says that some banks require a down payment of up to 20% of the market value of the equipment, referring to firms seeking finance to purchase key equipment and mention an indicative baseline LTV ratio of 50%.

Cash-flow-based lending

As we've seen above, asset-based lending is relatively straighforward, and lower risk as the asset is used as collateral. The decision making is more complicated if your business borrows against cash flows (for e.g. working capital purposes).

Cash-flow-based borrowing involves lending money to businesses based on their predicted cash flows. The bank has to assess how much you can borrow based on historical and projected financials.

Doing so requires to have a clear understanding of the future cash flows of the business, which can only be obtained through a business plan.

Most banks ask for business plans when you apply for a business loan because they need it to understand:

Who the borrower is

Whether or not there is collateral.

• If there is a trading history that supports the cash flow forecast
• What borrowing capacity and affordability can be inferred from the forecast

Firstly, the bank has to understand what entity or person it is lending money to. For example, if you take over a business, you could buy either its assets or shares.

If you were to buy their assets, a new company would likely be created but if you were to purchase their shares, you could do it directly or via a holding company (likelier option).

Depending on which option you choose, the bank has to decide whether it's lending to your current business, yourself or the holding company. The answer to this question then determines the level of risk the bank is undertaking.

Next, the bank has to decide whether or not there is sufficient collateral. Can it secure the loan against the business assets or does it need to request a personal warranty from the business owner(s)?

It will assess:

• Whether or not your current business has any assets that can be used as collateral
• If you, the business owner, have a house or cash in the bank or can offer a credible personal guarantee
• Whether or not the holding company will provide its shares as collateral or if it needs to ask its shareholders for a personal guarantee (or both)

Does the trading history supports the cash flow forecast

The bank will want to know if there is any trading history to support your cash flow forecast.

If there isn't, it becomes harder to judge and riskier from a lender's viewpoint.

Borrowing capacity and affordability: total indebtedness and credit metrics

Lastly, the bank will estimate your business credit score taking into consideration: whether or not you have any outstanding debt, what your past repayments were like, and credit metrics such as fixed charge coverage ratio, net debt-to-equity ratio, and interest coverage ratio (we'll detail these 3 ratios later in this guide).

Create your business plan online!

Get a professional business plan to support your application for bank loan.

Writing a business plan can be both tedious and difficult if you start from scratch. Luckily for you, online business plan software can help you write a professional plan in no time.

There are several advantages to using specialised software like The Business Plan Shop:

• You are guided through the writing process by detailed instructions and examples for each part of the plan
• You can be inspired by already written business plan templates
• You can easily make your financial forecast by letting the software take care of the financial calculations for you
• You get a professional document, formatted and ready to be sent to your bank
• You can easily compare your forecast against actuals from your accounting system to ensure you are on track to deliver your plan, and adjust your forecast to keep it up to date as time goes by

If you are interested in this type of solution, you can try our software for free by signing up to The Business Plan Shop today .

There are seven key sections that any business plan for a bank loan must include:

• Executive summary
• Company Overview
• Products and services
• Market analysis
• Financial projections

Let's have a look at each one in more detail.

1. Executive summary

Your executive summary should provide the bank with a quick snapshot of your business. Remember that this is the first section of your business plan that they will look at - you need to keep them interested and do not need to go into depth.

Instead, outline who you are (what type of business) and what goods or services you sell. You'll also need to give them a glimpse of your financial projections (expected revenues and profitability).

Lastly, you should explain what are your total funding requirements and how much you are seeking to borrow from the bank.

2. Company Overview

In this section, you should explain what structure your business takes up (sole trader, partnership or limited liability company). This way, the bank understands whether or not you are liable if your business defaults on its loan. If you are not they might ask you for a personal guarantee.

If you are a partnership or limited liability company, state who your partners are and what percentage of the business they own. Also, outline any skills and experience they have that make them suitable for their role.

Finally, you should state where your business(es) are located and why that particular location was chosen (for example, it could be because of the parking slots available or transport links, making it very accessible for potential customers).

3. Products and services

You should include a detailed list of the products or services that you sell. Whilst you don't have to specify every single item or service, you should aim to include all of the key ones.

For example, for a hair salon, this might be hair care, washing, stylish haircuts, combing, hair colouring, waving, and hair straightening.

4. Market analysis

The market analysis section of your business plan for a bank loan is where you bring together your local and national market research. Using charts and graphs along with text makes it easier to illustrate your points clearly.

You should also state who you plan to target and the competitors in your local market. For example, if you were a coffee shop business, you could target people seeking a takeaway coffee, those looking for a lunch or snack or people looking for a place to work.

Finally, you should state the regulation in effect in the local market and whether there are any plans to make changes in the future (by the council for example).

5. Strategy

Your strategy section helps explain how you plan to make your business a success. Both marketing and pricing strategies feature in this section.

Explain how you've determined your prices and whether or not they differ from your competitors. Remember that this will depend on your overall pricing strategy (cost-plus pricing, competitive, price skimming, etc.).

Your marketing plan should explain how you plan to attract and retain customers. For example, you could have an attractive storefront with your logo to encourage potential customers to visit inside. You might also offer loyalty cards (for example, buy 3 burgers, get the fourth one free).

Finally, key milestones must also be outlined so that both parties are aware of what needs to be achieved within an agreed-upon timeframe along with measures taken against any foreseeable risks and mitigants related thereto.

6. Operations

The operations section of your business plan for a bank loan should include information about your staffing team. List any current and future recruitment plans, employee skills, experience and what roles they are going to take up.

Plus, you should state what suppliers you chose and why. For example, you might have chosen a particular supplier thanks to their eco-friendly stance or brand reputation.

7. Financial projections

Arguably the most important section in your business plan for a bank, your financial projections help the bank decide whether or not they should lend to your company.

This section includes your balance sheet, profit and loss statement and cash flow forecast. Figures from these three statements are used to compute key ratios (see the section below).

Profit and loss statement

A projected P&L statement shows how much money the company might make and how much it will grow in the future.

It helps stakeholders understand how successful the company could be.

Balance sheet

A balance sheet shows what your business owns (assets), what it owes (liabilities), and what has been invested by the owners (equity).

Looking at a balance sheet enables investors, lenders, and business owners assess the capital structure of the business.

One key aspect of this analysis is achieved by calculating key liquidity (short-term) and solvability (long-term) ratios to understand if the company can pay its debts as they fall due.

Cash flow statement

A projected cash flow statement is a document used to plan out how much cash a your business will generate (inflows) and spend over a certain period (outflows).

This document shows the expected cash flows from the operations, investments and other financial activities.

Having this information can help you decide how much money your business needs to save for future expenses or investments, as well as anticipate potential cash shortfalls.

Like most business plans, there's no specific number of pages that yours must have. A good rule of thumb, however, is to keep it between 15 and 35 pages.

As long as you've covered all of the key sections, ranging from the executive summary to the financial projections, your business plan for a bank loan should be good to go.

Remember, quality is more important than quantity.

Get a professional business plan to support your bank loan application.

It's worth noting that ratio targets set by lenders are industry dependent.

There are usually three key financial ratios that banks calculate before lending money:

1. Fixed charged coverage ratio

This solvency ratio assesses how much headroom a business has over its upcoming debt repayments.

It is calculated by dividing the Cash flow available for debt service (or CFADS), which measures how much cash flow is available to pay off debt obligations, by the amount to be paid to service the debt (interest plus principal repayments).

It is one of the main ratios used by lenders to assess the borrowing capacity and the financial risk of a given business.

For businesses utilising bank debt, lenders usually expect the fixed charge coverage ratio to be above 2.0x, which implies that the business is expected to generate twice as much cash as is needed to service the debt, leaving a healthy buffer.

In any case, the ratio should be above 1.0x, below 1.0x the business is not generating enough cash to service its debt which puts lenders at risk.

For example, if your business records a CFADS of £500,000 and total debt service amounting to £250,000 (£50,000 of interest payments, and £200,000 of principal repayments), it will have a fixed charge coverage ratio of 2.0x.

2. Debt to EBITDA

This solvency ratio is used to assess the level of debt and borrowing capacity of the business. It compares the level of debt to the firm’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), used as a proxy for the operating cash flow.

For example, if your company has debt worth £20m and an EBITDA of £5M, your debt to EBITDA ratio would be £20m/£5m = 4.0x.

In simple terms, a company with a debt to EBITDA ratio of 4.0x would need at least 4 years to repay its debt. Whether or not this is too high will depend on the sector and the risk appetite of the lender.

3. Interest coverage ratio 

This solvency ratio is commonly used by lenders to measure a business's ability to pay interest on its debt. It compares the firm’s EBITDA, used as a proxy for the operating cash flow, with the amount of interest expense due in a financial year. 

For example, if your business has an EBITDA of £500,000 and interest expenses amounting to £50,000, it will have an interest coverage ratio of 10.0x.

The rationale behind this ratio is that, if the company was to default on its debt, lenders could potentially agree to delay the principal repayments as long as the company remains able to at least pay the interest. In that scenario, their capital would remain at risk but lenders would still be able to earn a return.

The higher the interest coverage ratio the better. Targets set by lenders are industry dependent. An interest coverage ratio higher than 4.0x is generally a good starting point.

Most of the business plan templates offered by The Business Plan Shop are examples of companies seeking bank loans and so can be used to structure your own plan.

We have templates to fit various industries including hospitality, retail, services, construction, industrials and more.

We hope that this guide has helped you to better understand how to write a business plan for a bank loan. Do not hesitate to contact us if you still have questions.

Also on The Business Plan Shop

• 5-years business plans explained
• Business plan vs budget: what's the difference?
• Business plan structure: an in-depth guide

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Top 9 Business Plan Templates

Having a good business plan helps set the foundation for your business. It is vital for entrepreneurs to ask themselves essential and critical questions about their business.

We know finding the right approach when creating a business plan can be difficult, but the most important thing is to get started. With that in mind, we’ve curated this list from trusted sources including the U.S. Small Business Administration, Forbes and Score.  You’ll find a variety of free templates that fit businesses at all stages.

From competitive analysis to financial projections, a business plan is a roadmap that will guide you through each stage of your company and can help you get funding or attract new business partners.  

If you are just starting out, know there is no right or wrong way to write a business plan – the key is to get something on paper. 

Here are our top 9 business plan templates. Check them out and find the one that’s the right fit for you. 

1. Simple One-Page Business Plan Templates from Oprah.com

If longer multi-page templates look overwhelming, get a simple six-part guide that will help you write a one-page business plan.  Oprah.com provides three different sample one-page plans from different businesses to help spur ideas. 

If you are looking quickly get the details all on one page – these templates are great examples to better understand what to include in a business plan. Review the completed templates to your advantage, as many of the ideas can inspire o the outline for your own plan.

Get the templates

2. User-Friendly Templates from The Balance Small Business

For a clear understanding of what goes into creating a business plan, get The Balance’s Simple Business Plan Template . 

Their comprehensive guide helps you through each section while answering all your questions. They provide the pros and cons of a business plan template, help you decide on simple or detailed, and have a ‘how to use the template’ section so there is no confusion. 

Their template is perfect for those looking for a detailed and thorough template that is user friendly at the same time.

Get the template

3. Trusted Templates From the U.S. Small Business Administration (SBA )

As one of the most trusted and respected small business resources, the U.S Small Business Administration (SBA) provides one of the best and most thorough business plan templates available. 

They provide the ‘Traditional business plan’ along with the ‘Lean startup plan’ to meet the needs of small business owners at different stages.

The SBA provides example business plans for each template so you can get an idea of what to do for your own business. 

4. Cover Your Bases With a Step-by-Step Guide from Forbes

With many variations of business plans out there, Forbes put together a step-by-step template that covers your bases for exactly what to include in your plan. They provide an easy-to-read and easy-to-understand template to get you started.

Their template includes what you need to complete your business plan and how to take the next steps for your business with confidence. 

5. Business Plan Templates for Start-Ups from SCORE

If you want to increase the chances of your business start-up becoming successful, this is the business plan for you. 

SCORE is one of the leading nonprofit organizations dedicated to helping small business owners succeed and has created a business plan template that will help you lay the groundwork for your new business. 

The template is in-depth and customizable with over 150 questions to answer that will help you create the best business plan for your specific situation. 

6. Quick-Focus for Business Growth from Business.Govt.Nz

Business.Govt.Nz provides a straightforward and clear business plan that highlights the key aspects that are needed.

They offer two templates, one for start-ups and a quick-focus template for growing businesses. The guides will help you think about the critical details of your business and outline the steps needed for strategy, funding, and more.

7. The 10 minute Template from Plan Buildr

If you are looking for a brief and simple overview of a business plan, Plan Buildr’s got you covered. 

Their template is much less overwhelming and can be completed in just 10 minutes. This business plan template is not comprehensive but it can serve as a good starting point for your first draft. 

8. Business Plan Templates with 7 FREE samples from PandaDoc

PandaDoc provides 7 free sample templates.   Each template covers a different type of business from restaurants, to coffee shops, to salons and more.

This allows the entrepreneur to see a plan more closely aligned with their own business.

Working off of several business plan samples can be a great starting point if you are hitting a roadblock.  

9. Geared towards Getting Financing from CDC Small Business Finance

As a leading small business lender, CDC Small Business Finance helps business owners get access to financing every day.  With that knowledge, the loan team has developed outlines to help guide business owners, especially those seeking financing.

In addition, at the end of the template, they have also provided a robust list of resources for small business owners.

The Simple Business Plan helps you create a summary and provides helpful context and directions throughout each section. 

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Financing | Templates

How To Write an SBA Business Plan [+Free Template]

Published June 13, 2023

Published Jun 13, 2023

REVIEWED BY: Tricia Jones

WRITTEN BY: Andrew Wan

This article is part of a larger series on Business Financing .

• 1. Write the Company Description
• 2. Identify Organization & Management
• 3. Specify the Market Analysis
• 4. Write Descriptions of the Products or Services
• 5. Indicate the Marketing & Sales Strategy
• 6. List Financial Data & Projections
• 7. Write the Financing Request
• 8. Fill In the Appendix & Supplemental Information
• 9. Complete the Executive Summary
• Additional Resources

Bottom Line

If you’re applying for a loan from the Small Business Administration (SBA), there’s a good chance that you’ll need a business plan to get approved. An SBA business plan provides a summary of the various aspects of your business, and we will guide you through the process of creating it, from writing your company description and marketing and sales strategies to completing financial data and projections and your executive summary.

Although there is no standard format, and to help you ensure nothing is overlooked, you can use our SBA business plan template to ensure you cover the most important areas of your company. A well-prepared business plan can improve your chances of getting an SBA loan.

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Step 1: write the company description.

This section should contain information about the purpose of your business. It should include a description of the problem or challenge your product or service aims to solve and what types of individuals or organizations will benefit.

A strong company description should also address the following questions:

• Why does your company exist?
• What problems does your business aim to address?
• What prompted you to start your business?
• What organizations or individuals will benefit from your company’s product or service?
• What makes your company different from others?
• What competitive advantages does your business offer?
• What would a successful product launch look like?
• Does your company have strategic partnerships with other vendors?

Step 2: Identify Organization & Management

Details about the legal and tax structure of your business should be included in this section. It can also be helpful to include an organizational chart of your company. You can include information about each team member’s background and experience and how it is relevant to your company:

• Highlight what business structure you have selected and why. Examples commonly include a sole proprietorship, limited liability company (LLC), partnership, S corporation (S-corp), and C corporation (C-corp)
• Include an organizational chart showing which team members are responsible for the various aspects of your company
• You can include resumes for members of your leadership team highlighting their experience and background

Step 3: Specify the Market Analysis

The market analysis section of your SBA business plan should look at who your competitors will be. Look at what they are doing well, what their weaknesses are, and how your company compares.

The SBA’s market analysis page contains information on how you can approach this. Questions you should also consider addressing should include:

• Who are the major competitors in the market?
• What are competitors doing well and are there areas for improvement?
• How does your company compare to the top competitors?
• How has the product or service evolved over time?
• Are there any trends for supply and demand throughout the year?
• What can your company do to stand apart from the top competitors?

Step 4: Write Descriptions of the Products or Services

In this section, you should detail the product or service offered by your business. You should explain what it does, how it helps your customers, and its expected lifecycle. You can also include things like any expected research and development costs, intellectual property concerns such as patents, what the lifecycle of your product looks like, and what is needed to manufacture or assemble it.

Here are some things to consider as you are working on this section:

• Description of what your product or service does
• How your product or service works
• How your customers will benefit from your product or service
• Illustration of the typical lifecycle
• Any patents or intellectual property you or your competitors have
• Pricing structure
• Plans for research and development
• Discuss plans for handling intellectual property, copyright, and patent filings

Step 5: Indicate the Marketing & Sales Strategy

Details of your marketing and sales strategy will be highly dependent on your business. It’s also something that may evolve and change over time in response to things like the overall economic environment, release of competitor’s products or services, and changes in pricing.

With that being said, here is a list of some items that should be addressed:

• Who is your target audience?
• How will you attract customers?
• How and where will sales be made?
• If applicable, what will the sales process look like?
• Where will you market and advertise your product or service?
• How does your marketing strategy compare to other companies in the industry?
• How much should you spend on marketing?
• What is the expected return on investment for marketing?
• Do you have any data showing the effect of marketing?

Step 6: List Financial Data & Projections

If your business has been running, you should include information about its finances. This should include all streams of revenue and expenses. Data for financial projections should also be included, along with a description of the methodology you used to reach those conclusions.

If available, you should be prepared to provide the following financial documents for at least the last three years to five years:

• Personal and business tax returns
• Balance sheets
• Profit and loss (P&L) statements
• Cash flow statements
• Hard and soft collateral owned by your business
• Business bank statements for the last six to 12 months

Financial projections should include enough data to offer some confidence that your business is viable and will succeed. It’s recommended that you provide monthly projections looking forward at least three years, with annual projections for years four and five.

• Projections for revenue and methodology used in arriving at these figures
• Expected shifts in revenue or expenses as a result of seasonality or other factors affecting supply and demand
• Expected expenses from loan payments, rent, lease payments, marketing and advertising fees, employee salaries, benefits, legal fees, warranty expenses, and more

You can use our SBA loan calculator to help you estimate monthly payments for the funding you’re currently looking for and projections for any additional loans you may need. Monthly payments can fluctuate depending on the terms of your loan. If you’re looking for accurate estimates, you can read our article on SBA loan rates .

Step 7: Write the Financing Request

This section is where you should specify how much funding you need, why you need it, what you’ll use it for, and the impact you expect it will have on your business. It’s also a good idea to indicate when you expect to use the funds over the course of the next three to five years.

Here is a checklist of some important items you should cover:

• How much funding you need and why
• When you will use the funds over the next three to five years
• What you will use the funds for
• The expected impact this will have on your business and how it will help reach your business goals
• The anticipation of any recurring needs for additional funding
• Your strategy for how you expect to pay off the loan
• Any future financial plans for your business

Step 8: Fill In the Appendix & Supplemental Information

This last section of your SBA business plan should include any additional information that may be helpful for lenders. This can include more detailed explanations or clarifications of data from other sections of your business plan.

Here are some examples of documents you can include:

• Business licenses
• Certifications or permits
• Letters of reference
• Photos of products
• Resumes of business owners
• Contractual agreements and other legal documents

Step 9: Complete the Executive Summary

The executive summary, which is the first section in a business plan, should be no more than one to two pages and provide a high-level overview of the items listed below. Since each section above is already detailed, a brief description of those sections will be sufficient:

• Your company’s mission statement
• The background and experience of your leadership team
• The product or service and what purpose it serves
• Your target market for the product or service
• Competitive analysis of other products and services
• Your competitive advantage or why your company will succeed
• Marketing and sales strategy
• Financial projections and funding needs

Depending on the type of SBA loan you’re applying for, certain areas of your business plan may be weighed more heavily than others. You can learn about the SBA loan options you can choose from in our guide on the different types of SBA loans .

Additional Resources for Writing an SBA Business Plan

If you’re looking for additional resources to help you write a business plan, you can consider the options below. Since a business plan is just one of many documents you’ll need, you can also read our guide on how to get an SBA loan if you need help with other areas of the loan process:

• SBA: SBA’s business guide contains information on how you can start a small business. It includes steps on creating a business plan, funding your company, and launching a business.
• SCORE: Through SCORE, you can request to be paired with a mentor and get business-related education. Educational courses come in several formats, including webinars, live events, and online courses.
• Small Business Development Center (SBDC): SBDCs provide training and counseling to small business owners. This can help with various aspects of your company such as getting access to working capital, business planning, financial management, and more. You can use the SBA’s tool to find your closest SBDC .

Having a strong SBA business plan can improve your chances of getting approved for an SBA loan. If you’re unsure where to start, you can use our guide and template to cover the most important aspects of your business. You can also see our tips on how to get a small business loan . To get even more ideas on creating a strong business plan, you can also utilize resources through organizations such as SCORE and the SBA itself.

About the Author

Find Andrew On LinkedIn

Andrew Wan is a staff writer at Fit Small Business, specializing in Small Business Finance. Before joining the team, he spent over 10 years as a mortgage underwriter, recently becoming a Direct Endorsement underwriter for FHA loans. Andrew earned an M.B.A. from the University of California at Irvine, a Master of Studies in Law from the University of Southern California, and holds a California real estate broker license.

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How To Write A Business Plan for A Bank Loan (3 Key Steps)

Wondering how to create a business plan that will wow your banker.

You're not alone.

Most entrepreneurs see writing a business plan as a gargantuan task – especially if they've never written one before.

Where do you start?

How do you calculate the financials?

How can you be sure you're not making a mistake?

And if you need a business plan for a bank loan, getting this document right is absolutely essential.

So here's what we recommend: simplify the planning process by breaking the work up into manageable, bite–sized steps. That way, you can focus on one section at a time to make sure it's accurate.

Here's a quick overview of the step–by–step process we guide entrepreneurs through when they sign up for LivePlan.

Step 1: Outline The Opportunity

This is the core of your business plan. It should give loan officers a clear understanding of:

• What problem you're solving
• How your product or service fits into the current market
• What sets your business apart from the competition

There are three key parts to this step:

The Problem & Solution

Detail exactly what problem you are solving for your customers. How do their lives improve after you solve that “pain point” for them?

We recommend actually going out and chatting with your target audience first. That way, you can validate that you're solving a real problem for your potential customers.

Be sure to describe your solution in vivid detail. For example, if the problem is that parking downtown is expensive and hard to find, your solution might be a bike rental service with designated pickup and dropoff locations.

Target Market

Who exactly are you selling to? And roughly how many of them are there?

This is crucial information for determining whether or not your business will succeed long–term. Never assume that your target market is “everyone.”

For example, it would be easy for a barber shop to target everyone who needs a haircut. But most likely, it will need to focus on a specific market segment to reach its full business potential. This might include catering to children and families, seniors or business professionals.

Competition

Who are your direct competitors? These are companies that provide similar solutions that aim to solve your customers' pain points.

Then outline what your competitive advantages are. Why should your target market choose you over the other products or services available?

Think you don't have any competition? Think again. Your customers are likely turning to an indirect competitor that is solving their problem with a different type of solution.

For example: A taco stand might compete directly with another taco stand, but indirectly with a nearby hot dog vendor.

Boost your chances of securing a loan

See how LivePlan can help you write a fundable business plan

Step 2: Show how you'll execute

This is where the action happens! Here you'll get into the details of how you'll take advantage of the opportunity you outlined in the previous section. This part demonstrates to banks that you have a strong plan to achieve success.

The three main components of this step include:

Marketing & Sales Plan

There can be a lot of moving parts to this one, depending on your business model.

But most importantly, you'll need to fully explain how you plan to reach your target market and convert those people into customers. A few example of what should be included:

• Positioning strategy. What makes your business both unique and highly desirable to your target market?
• Marketing activities. Will you advertise with billboards, online ads or something else entirely?
• Pricing. What you charge must reflect consumer demand. There are a few models to choose from, including ‘cost–plus pricing’ and ‘value pricing.’

This is the nuts and bolts of your business. It's especially important for brick–and–mortar companies that operate a storefront or have a warehouse.

You may want to explain why your location is important or detail how much space you have available. Plan to work at home? You can also cover your office space and any plans to move outside your house.

Any specialized software or equipment and tools should also be covered here.

Milestones & Metrics

Lenders and investors want to be confident that you know how to turn your business plans into financial success. That's where your milestones come in.

These are planned goals that help you progress your company. For example, if you're launching a new product your milestones may include completing prototypes and figuring out manufacturing.

Metrics are how you will gauge the success of your business. Do you want to generate a certain level of sales? Or keep costs at a certain level? Figuring out which metrics are most important and then tracking them is essential for growth.

Step 3: Detail your financial plan

This is the most crucial – and intimidating – part of any business plan for a bank loan. Your prospective lender will look especially close at this section to determine how likely your business is to succeed.

But the financial section doesn't have to be overwhelming, especially if you break the work into smaller pieces. Here are 3 items that your plan must have:

Simply put, this is your projections for your business finances. It gives you (and the bank) an idea of how much profit your company stands to make. Just a few items you'll need to include:

• Revenue. List all your products, services and any other ways your business will generate income.
• Direct costs. Or in other words, what are the costs to make what you sell?
• Personnel. Salaries and expenses related to what you pay yourself, employees and any contactors.
• Expenses. Things like rent, utilities, marketing costs and any other regular expenses.

Exactly how will you use any investments, loans or other financing to grow your business? This might include paying for capital expenses like equipment or hiring personnel.

Also detail where all your financing is coming from. Lines of credit, loans or personal savings should be listed here.

Bankers will be giving this section a lot of attention. Here's what you'll need:

• Profit & Loss. This statement pulls in numbers from your sales forecast and other elements to show whether you're making or losing money.
• Projected Balance Sheet. This is likely the first thing a loan officer will look at: it covers your liability, capital and assets. It provides an overview of how financially sound your business is.
• Projected Cash Flow. Essentially, this statement keeps track of how much money you have in the bank at any given point. Loan officers are likely to expect realistic monthly cash flow for the next 12 months.

Don't forget the Executive Summary

The Executive Summary is the first section of your business plan, but we recommend you tackle it last.

It's basically an introduction to your company, summarizing the main points of your plan. Keep it to just one or two pages and be as clear and concise as possible.

Think of it as a quick read designed to get the lender excited about your business.

If you need help writing your plan

Not everyone feels confident writing a business plan themselves, especially if it's needed to secure a bank loan.

And although you don't need an MBA to write one, getting your business plan right often does require quite a bit of work. So if you need help writing your plan, here are two options to consider:

• Hire a professional business plan writer to do it for you. This is typically the most expensive route, but worth it if you're pursuing $100,000 or more in capital.
• Sign up for LivePlan. It's business planning software that walks you through a step–by–step process for writing any type of plan. It's an affordable option that also gives you an easy way to track your actuals against your business plan, so you can get the insights you need to grow faster.

LivePlan makes it easy to write a winning business plan

No risk – includes our 35-day money back guarantee.