do you need a business plan to get a loan

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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.

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

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

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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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How to Get a Business Loan

What you need to qualify for a business loan, documents you need to apply for a business loan, types of business loans, compare the best business loans.

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If you’re a business owner, there may be times when you need an infusion of cash to cover business operations, buy equipment, make upgrades, or to start the business in the first place. That’s why it’s important to know how to get a business loan in case you ever need one.

Getting a business loan involves figuring out the right loan for your needs, comparing lenders, gathering the proper documentation , and completing an application. Follow the detailed step-by-step process, learn what you need to qualify, and understand your business loan options.

Getting a business loan is similar to other loans you might have gotten, but there are a few additional aspects that come into play. 

Step 1: Determine Why You Need A Loan, and How Much Money You Need 

There could be a number of reasons why you’d need to borrow for your business, from having enough working capital to meet your operating costs, to purchasing new equipment or refreshing your retail or office space, to expansion. As for how much, ideally, you want to figure out the “just right” amount so you’re not overextending yourself, but you also don’t want to come up short.

Step 2: Figure Out the Type of Loan That’s Best for You

Do you want a loan with fixed payments and a long period of time to pay back? Would you be better off with a line of credit you can pull from as needed? How do you feel about putting up collateral? Does your credit and business situation put you in a good position to qualify for competitive loan options? These are just a few of the questions to ask yourself.

Step 3: Shop Around for Lenders

Once you know how much you need and the type of loan you’re aiming for, you can start looking into lenders to get more details on how to qualify. You can also get an idea of rates and term options so you can compare and find the best deal for you.

Step 4: Review the Qualifications to See If You Meet Them

Every lender and type of business loan could vary when it comes to what’s required for approval. It may be a particular credit score, or having a certain amount of business income. Make sure you meet at least the minimum requirements before you apply, so you can save yourself time and effort. 

Step 5: Gather Your Documentation and Apply

Once you find a lender and loan that works for you, make sure you have everything you need in front of you so you can complete the application. This can include business banking statements, tax returns, personal information, and more.

Just because you don’t meet the eligibility for one lender doesn’t mean you won’t qualify for another product. There are business loans for all levels of business, even start-ups that have poor credit. Just note that your credit status and business financials will impact the cost of borrowing.

Getting a business loan is possible even if you don’t have perfect credit or are a fairly new business, but qualifications vary depending on the loan program and lender. That said, there are a few eligibility factors for business loans that most loan programs have in common. 

Credit Score

Business lenders will most likely review both your personal credit score and your business credit score, but in some cases, they might focus on one over the other.

Business History

Usually, to qualify for a business loan, lenders require that you be in business for a certain amount of time. It could be two years, one year, or six months. It all depends on the lender.

Knowing that your business brings in a certain level of revenue on a consistent basis will make you a less risky borrower. That’s why some lenders want to see your business financials to determine if they will extend the loan to you. 

When you apply for a business loan, you’ll still need to show a form of personal identification, provide your social security number, and give permission for the lender to run a personal credit check.

Lenders may want to see a mix of personal and business financial documents, including tax returns, profit and loss statements, bank statements, etc.

Most of the legal documents you’ll need are for your business, such as your business license, business lease, articles of incorporation, and business plan (if going for a start-up business loan ).

When you’re looking for the best business loan for your needs, here are some options to consider:

• Term loan : Get an up front, lump sum of cash and pay off with fixed payments for the loan term.
• Line of credit : A revolving credit line that lets you borrow as much as you need, pay it back, and draw from it again.
• Secured : These loans require the borrower to put up collateral to offset the risk to the lender.
• Unsecured : These loans rely on credit history and other factors to determine eligibility since there is no collateral involved.
• Merchant cash advance : Borrowers get a lump sum of money, and then pay the lender, which is often a payments processor, a small percentage from the revenue they earn.
• Invoice factoring : Short-term loans used to provide cash flow in which the lender takes over outstanding invoices at a discounted rate. Example: Your business has an invoice of $10,000 due in 60 days. If you factor the invoices at a rate of 5%, you will receive $9,500 now from the factoring company, and they make $500 profit when they collect the invoice.

Can You Get a Business Loan With No Business Revenue?

While most business loans want to see consistent business revenue as one of their eligibility requirements, there are some loans like microloans that are geared toward startups that won’t yet have that track record of earnings. Another option is to find an alternative lender that offers loan programs that offset risk by asking for collateral or having higher credit standards.

What Credit Score Is Required for a Business Loan?

Business loan credit score requirements vary by lender. For instance, business loans for bad credit might only require 500 and above. There are also business loans with no credit check . At the other end of the spectrum, some loans may have higher minimum credit scores depending on which loan type.

Do Business Loans Require Collateral?

Not all business loans require collateral , but some do. Usually, if you’re putting up collateral, it’s to compensate for not having a high enough credit score or being in business for a short time. Going with a collateral loan (or secured loan) may allow you to get a lower interest rate than an unsecured loan. Some businesses will use their inventory as collateral during warehouse financing .

What Qualifies as a Small Business?

While some may think of small businesses as solo practitioners or mom and pop shops, the Small Business Administration has a far broader interpretation. To qualify as a small business , a company cannot exceed standards for average annual revenue or average number of employees, depending on the industry. For example, soybean farmers are considered to be a small business up to $2.25 million in annual revenue, while flooring contractors are small up to $19 million in annual revenue. New car dealers can employ up to 200 people and still be considered a small business, while short-line railroad operators can hire as many as 1,500 workers and still be considered small.

U.S. Small Business Administration. “ Table of Small Business Size Standards Matched to North American Industry Classification System Codes .”

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How to Write a Business Plan for a Loan

Business plans are often required when applying for funds from venture capitalists or other private investors, but even if you are seeking a bank loan for your company it is very helpful to prepare one since the lender wants to be confident that he is taking on an investment with growth potential so that you can repay the loan.

In this article, you will learn about the types of business loans, the importance of the business plan in your application for a loan, and how to write a business plan that will help you get the funding you need for your company.

Download our Ultimate Business Plan Template here

What Is a Business Loan?

A business loan is funding that is provided by a financial institution to a company for it to carry out its day-to-day operational activities. It also supports the purchase of equipment, refinancing of debt, and other purposes. Small businesses might need these loans because they may not have enough funds to buy equipment, refinance debt, or because they encounter financial difficulties.  

Your Loan Application

You can apply for a commercial loan with your local bank, credit union, Small Business Administration (SBA) lender, or community development financial institution like Capital Impact. You should expect that the lender will ask you detailed questions about all aspects of your business to ensure that he or she is lending you money that will be repaid.

In addition, if you are looking to purchase a business or commercial real estate, the lender may ask for additional information and documentation to assess your qualifications and ability to repay the loan.

Before applying for a business loan it can be helpful to research different types of loans so you understand what is available and what you will need to pay attention to in your loan proposal.

Common Types of Business Loans

There are many types of loans for small businesses, including:

• lines of credit
• commercial mortgages
• equipment financing

Contact different lenders in your area to see what kind of loan terms they offer and if their interest rates are within your budget.

What is a Business Plan?

A traditional business plan is a document that provides an analysis of the present situation and future financial projections for a company. It includes details about the owners, management team, customers, location of the business, finances, marketing plan, and other information.

A comprehensive and well-researched business plan will help lenders make informed decisions about providing a loan for your business.

To help you get started, you can download our sample business plan for bank loan pdf .

Why Do You Need a Business Plan to Get a Business Loan?

A loan proposal business plan is your opportunity to show the lender you understand your business, its capabilities, and how it operates within the industry in which it competes. By putting together a clear and concise document that outlines all of this information, the lender should have a much easier time understanding how you have arrived at your numbers and where you are going in the future.

A business plan is also helpful to the lender because it provides an opportunity for him or her to ask you questions, further clarifying details that might not be clear from your application materials alone. This way the lender can walk away from the meeting with a good understanding of what he or she is loaning money to and how likely it is he or she will see the loan repaid.

How to Write a Business Plan to Get Approved for a Loan

Different lenders may ask for different sections of your business plan, but most require some combination of the following key elements.

1. Executive Summary

The Executive Summary is the first section of your business plan that a lender will read, but typically the last section written. It is very important because it acts as a snapshot of your business plan and allows the person reading to get an overview of what you are proposing.

The summary should include:

• A statement about why you need the business loan
• Details on how much money you want to borrow, when you will repay it, and interest rates
• A description of how the proceeds from the loan will be used
• Your business’s historical and projected financial information (again)
• The expected impact on your company and the industry as a whole if you are successful.

2. Company Description

In the Company Description, you should include basic facts about your company such as:

• What is the business structure (corporation, partnership, limited liability company (LLC), etc.)?
• How long has your company been in operation?
• What is the size of your workforce?
• What accomplishments or milestones have you achieved within the last year?

This section should also include information about your future business plans.

• How do you plan to expand, if at all?
• Who are your main competitors and how is your company different from them?
• What changes will you make to excel against these competitors?

3. Industry Analysis

In the Industry or Market Analysis, you should include information about your industry in general.

• What are the strengths and weaknesses of your industry?
• How will your company compete in it?
• What trends within the industry affect its future success or potential struggles?

You may also include information about your specific niche in the market. If your company operates in a very specific area of the industry, be sure to highlight it.

4. Customer Analysis

The Customer Analysis section of your business plan helps a lender understand who your customers are and why they will buy from you.

In this section, you should include information on the following:

• Your target audience and the individual customer segments
• How many potential customers you have within your target market
• How much your customers typically spend, and how much you expect them to spend in the future
• What has caused these changes or trends to occur and how they will impact your business

5. Competitive Analysis

This section should show the competitive landscape and how you plan to compete against your competitors.

• What are their strengths?
• Where do they fall short?
• What changes will you implement to get ahead of them?
• What are your company’s competitive advantages over these competitors?

6. Marketing Plan

This section should include a detailed description of the marketing strategy you plan to implement.

• What is your customer acquisition cost? How much will it cost you to bring in one new customer?
• How will you reach these potential customers? Be specific about your marketing strategy, advertising methods and costs.
• Who is responsible for implementing each part of the marketing plan and how much it is expected to cost?

7. Operations Plan

Your Operations Analysis should describe the way your company currently operates and how it will operate with the help of the loan.

• What are your company’s strengths? Weaknesses?
• What have you implemented in the past 12 months that has led to increased revenue, decreased costs, or improved efficiency?
• How will you continue to operate efficiently with the proceeds?

8. Management Team

In the management section, you should describe your business in terms of its personnel structure.

• What are the responsibilities of each person on your team?
• Who are they? What are their qualifications?
• How will their roles change when you receive the loan proceeds?

9. Financial Plan

This section should include your company’s financial statements include the projected income statements, projected balance sheet, and cash flow statements for the next 3 – 5 years.

You can assume that you will receive loan proceeds in 20XX, so plan accordingly.

Include a five-year break-even analysis and an explanation of how you arrived at your income statement and cash flow projections. Don’t forget to include interest and loan payments in your financial projections.

10. Appendix

In this section, you will include the supporting documents for the claims within your business plan. This section should include:

• A loan agreement
• A list of all applicable business licenses, permits, etc. that your company holds or has applied for

You may also include:

• An organizational chart for your company
• The resumes of the members of your management team
• The resumes of any employees who will be making a significant impact on your business with the loan money
• Copies of contracts, leases, and other agreements that are relevant to your business plan
• Complete financial statements and projections if you only include a summary in the Financial Plan section

These documents should be attached to your business plan in a separate file if they are not included and may need to be submitted with the final small business loan application.

Tips for Writing a Business Plan for a Loan

To have a successful business plan and loan application, you need to know exactly what information your loan officer is looking for and how to find it.

• Before you submit your application, be sure to carefully edit and proofread it for errors. Errors in a business plan may lead a lender to question your attention to detail, so make sure it is polished and error-free.
• Always be sure to include an executive summary of the main points of your plan at the beginning, as some loan officers may not read all of the details.
• Be sure to keep your tone professional and business-like.
• Include detailed financials, market analysis, and other crucial information.
• Remember that any omission or inaccuracies will be carefully scrutinized by a lending officer, so be sure you have all of the necessary documents before submission.
• Finally, remember that lenders often appreciate creativity and outside-the-box thinking when it comes to business plans, but don’t let it distract from the necessary information for your application.

Writing a good business plan is one of the most important and necessary steps toward securing a loan or other source of capital.

Use our proven business plan template provided below, and you’ll be able to give your lender all of the information they need to make an informed decision.

The key is to do it right. By following the steps outlined above and including all of the necessary documents (and editing/proofing your application), you should significantly improve your chance of securing a loan for your business.

How to Finish Your Business Plan in 1 Day!

Don’t you wish there was a faster, easier way to finish your business plan?

With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

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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.

How to Write an SBA Business Plan + Template

Noah Parsons

10 min. read

Updated November 21, 2023

Applying for a Small Business Administration loan typically requires a business plan.

Unfortunately, there’s no SBA loan business plan format that guarantees approval. The SBA even states you should “pick a business plan format that works for you.” 

While I agree with this sentiment, I’ve found that entrepreneurs who explain how funds will be used and how they will repay the loan tend to be more successful. 

Luckily, these details can be covered using our SBA-lender-approved business plan format . I’ll go over that structure in this article, and focus on the sections that the SBA prioritizes, so you can maximize your chances of getting funded .

You can even download a free SBA-lender-approved business plan template to fill out as you read. 

Let’s get started.

• Why you need a business plan for SBA loans

SBA loans require good documentation of your business and personal finances. You’ll need to pull together your past tax returns, bank statements, and various application forms depending on the type of SBA loan you apply for.

The bank issuing the loan will also want to know about the future of your business. 

They’ll want to see how the loan will be used and if future cash flow projections are realistic and indicate you can afford loan payments.

That’s where writing an SBA business plan comes in. 

Not only will your business plan describe your business to the lender, but it will include the financial projections the bank will use to determine if you qualify for the loan .

• What your business plan should include, according to the SBA

Business plans for SBA loans follow a fairly standard structure, but that doesn’t mean you need to follow it exactly. 

The SBA even recommends adjusting the plan outline to serve your needs. If a section does not apply to your business, it’s fine just to remove it.

Here’s the successful business plan structure I recommend for SBA loans:

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1. Executive summary

A great executive summary is a short, simple overview of your business. It should be easy for a loan officer to read and clearly understand what your business does. 

When applying for an SBA loan, highlight your: 

• Business opportunity
• Financial forecast
• How much money you want to borrow and how it will be used

Remember, an executive summary should be short and to the point. The rest of your business plan will provide additional details.

[Dig deeper: How to write an executive summary ]

2. Company description

Some people call this section “Products and Services.” Either option is fine. The important thing is that you use this section to explain what your business opportunity is. 

You need to cover: 

• The problem you solve
• Who you’re solving it for
• What your solution is and why it’s better

Be specific and tell the story of your business and your customers. Focus on your strengths and what sets you apart from competitors. 

If your company is developing a product, include information on:

• What the product life cycle looks like
• Intellectual property filings
• Current research and development

If these topics don’t apply to your product, that’s fine. Just be sure that the description of what you sell is clear.

3. Market analysis

The market analysis chapter explains who your customers are. It provides an overview of your target market, competition, and industry.

Your target market is essentially a description of your ideal customers. Be sure to include specific demographic information (like age, gender, location, income) and psychographic information (hobbies, purchasing behaviors). 

This data should reinforce that your target market needs your solution .

It’s helpful to also include information on the size of your target market . Lenders will want to see evidence of enough potential customers to drive growth. 

While your target market information describes your customers, an industry overview discusses the type of business you’re in and its potential for growth. 

For example: If you’re starting a fast-casual restaurant, your industry overview might discuss the increased interest in fast-casual dining and how more people are eating in these types of restaurants every year. 

Finally, you’ll need to include a competitive analysis . This is a list of current competitors and alternatives, with explanations of why your business is a better option. 

Your goal is to show how your business is unique, what opportunities and threats there are, and how you plan to address the competition.

4. Organization and management

Also known as your company overview, this section is where you describe your legal structure, history, and team .

For your SBA loan application, you should focus on describing who is managing the business as clearly as possible. 

You may want to include an organizational chart. You should provide detailed resumes for everyone in leadership positions. Each team member’s experience, skills and professional qualifications can mitigate risk in the eyes of a lender .

To show you’re thinking ahead, it’s also helpful to include key positions you plan to fill as you grow. 

5. Sales and marketing plan

Your goal in this section is to summarize how you will attract, retain, and sell to your customers.

The marketing strategies and sales methods you describe should always have the customer top of mind, and demonstrate that you know how to connect with them. 

To help a loan officer visualize this, you can provide examples of marketing messaging, visuals, and promotions. If you have any research or results to show that your strategy has merit, include those as well. 

6. Financial projections

SBA lenders typically require 5 years of financial projections — including profit and loss statements , balance sheets , and cash flow statements . 

Be sure to include the SBA loan in your projections in the following areas: 

• A liability on your balance sheet.
• Payments on your cash flow.
• Interest expenses on your profit and loss statement. 

I’ll dive into specific details of what you should focus on in the “how to improve your chances” section.

Your first year of financial projections should include monthly details. After that, annual summaries are usually sufficient for most SBA lenders. Occasionally, a lender might require 24 months of monthly projections, so check with your bank before submitting your business plan. 

If your business is up and running, you must also provide historical financial reports for the past 12-24 months of operations—including income statements and a current balance sheet.

Typically, you will also need to provide reports on your personal finances , including any assets you have, such as a home or car. 

Finally, include a section explaining your use of funds—what exactly you plan to use the loan for.

7. Appendix

The appendix is your chance to provide additional documents that support sections of your business plan. 

When applying for a loan, these may include:

• Employee resumes
• Licenses and permits
• Patents and other legal documents
• Historical financial statements
• Credit histories

Don’t worry about stuffing your appendix full of additional documentation. Only include information if you believe it will strengthen your approval chances, or if your lender specifically asks for it.

• How to improve your chances of being approved for an SBA loan

Your SBA business plan needs to focus on the loan you are applying for and how that will impact your business financially. 

Make sure to include the following information in your financial plan to increase your chances of success with your lender:

Funding request 

In your executive summary, document how much money you are asking for. It’s best to put your number where it can be clearly read, instead of trying to bury it deep within your business plan.

Remember, there are limitations to how much you can borrow through SBA-backed loans.  Most have a maximum loan amount of $5 million, while SBA Express loans have a maximum loan amount of $350,000. 

Use of funds

You should also describe how you plan to use the loan and which aspects of the business you want to invest in. 

Some SBA loans are designed specifically for expanding export businesses or funding real estate transactions. So, make sure your use of funds description is appropriate for the loan you are applying for.

Cash flow forecast

Be sure to include the loan in your cash flow statements and projections . You want to demonstrate that you’ve planned how you will use and repay the loan.

You need to show:

• When you anticipate receiving the loan.
• How the loan will impact your finances. 
• Loan payments for the life of the loan. 

Having this prepared won’t just increase the chances of your application being approved—It  will make it much easier to manage the loan after you receive funding . 

Balance sheet 

You’ll also want to put the loan on your projected balance sheet , and show how the loan will get paid down over time. 

The money you owe will show up on your balance sheet as a liability, while the cash you receive from the loan will be an asset. Over time, your forecasted balance sheet will show that the loan is getting paid back. 

Your lender will want to see that you have forecasted this repayment properly.

Profit & Loss forecast

Your P&L should include the interest expenses for the loan, and show how the interest will impact your profitability in the coming months and years.

• How long does an SBA business plan need to be?

The SBA doesn’t have an official recommended or required business plan length . As a general rule of thumb, you should make your business plan as short and concise as possible. 

Your business plan is going to be reviewed by a bank loan officer, and they will be less than excited about the prospect of reading a 50-page business plan.

If possible, keep the written portion of your business plan between 10-15 pages. Your financial forecasts will take up several additional pages. 

If you’re struggling to keep it short, try a one-page plan

A great way to start your business plan is with a simple, one-page business plan that provides a brief and compelling overview of your business. 

A good one-page plan is easy to read and visually appealing. Once you have your one-page plan, you can expand on the ideas to develop your complete written business plan, and use the one-page plan as your executive summary. 

Loan officers will appreciate a concise overview of your business that provides the summary they need before they start looking at your complete business plan and financial plan .

• Resources and tools for writing an SBA business plan

Remember, you can download a free SBA-lender-approved business plan template . It includes detailed instructions to help you write each section, expert guidance and tips, and is formatted as lenders and investors expect.

If you’re looking for a more powerful plan writing tool, one that can also help you create financial forecasts for the use of your loan, I recommend you check out LivePlan . 

With LivePlan, you get:

• AI-powered recommendations: Generate and rewrite sections of your plan to be more professional and persuasive.
• Step-by-step instructions: In-app examples, tutorials, and tips to help you write an impressive business plan.
• Automatic financials: Skip the spreadsheets and complex formulas, and quickly create accurate financial forecasts with everything a lender needs.
• A built-in pitch presentation: Print or share your full business plan, one-page pitch, and financial reports—all with a professional and polished look.

Whether you use the template, LivePlan, or try writing a business plan yourself, following the structure and tips from this article will improve your chances of getting an SBA-backed loan. 

And for additional SBA-focused resources, check out our guide on how to get an SBA loan .   

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

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How to write a business plan for a loan from a bank.

Learn how to increase your chances of securing a bank loan with these business proposal tips.

If you want a bank loan to start a new business or expand your existing one, you’ll need a thorough business proposal (also known as a loan proposal). It shows the bank (or lender) that you’ve got a plan that’s likely to succeed.

But loan proposals can also be tedious and complicated to draft. Use the following tips to learn how to write a business proposal for a bank loan and get a head start on success.

Why writing a business proposal for a bank loan is necessary.

When you’re considering getting a loan from a bank to support your business , one important step is creating a well-thought-out business proposal. This will not only help you explain your business plans but also play a big role in helping the bank decide whether to approve your loan request. Here are the main reasons why putting together a solid business proposal for a bank loan is so important:

• Clarity. A well-crafted business proposal helps you clearly articulate your business idea, goals, and objectives to the bank. This ensures that both you and the bank are on the same page regarding the purpose of the loan.
• Risk assessment. Banks need to assess the risk associated with lending you money. Your business proposal provides them with vital information about your business model, market analysis, and strategies, enabling them to gauge the level of risk involved.
• Repayment plan. Banks want to know how you plan to repay the loan. Your proposal should outline a clear and realistic repayment strategy, including cash flow projections and a timeline for repayment.
• Financial health. Lenders need to determine if your business is financially viable and can generate enough income to cover loan repayments. Your proposal should demonstrate the financial health of your business through financial statements, revenue projections, and profit margins.
• Legal requirements. Banks need to ensure that your business complies with all relevant laws and regulations. Your bank proposal letter for a business loan should address any legal considerations, licenses, permits, or certifications required.

What does a business plan proposal for a bank loan look like?

A business plan proposal for a bank loan is typically 20 to 30 pages long and follows a structured format:

• Cover sheet. A cover sheet is often included at the beginning of the proposal. It typically contains the business name, logo (if applicable), contact information, and the date of submission.
• Executive summary. This section provides a concise overview of the entire business proposal, summarizing key points such as the purpose of the loan, business description, financial projections, and the requested loan amount. It’s usually limited to one to two pages.
• Business description. This section offers a detailed explanation of the business, its history, mission, and vision. It also outlines the industry it operates in, its target market, and its competitive analysis.
• Market analysis. Includes market research findings, including market size, trends, and customer demographics. It should also detail your marketing and sales strategies.
• Management team. Describes the qualifications and experience of key members of your management team. Include their roles and responsibilities.
• Financial projections. Includes financial statements such as income statements, balance sheets, and cash flow projections. It should also outline how the loan will be used and how it will benefit the business.
• Loan request. Specifies the loan amount you are requesting from the bank, along with the purpose of the loan.
• Collateral and guarantees. If the loan requires collateral or personal guarantees, provide details about the assets or individuals involved.
• Repayment plan. Explains your proposed loan repayment strategy, including the terms, interest rate, and repayment schedule.
• Appendices. This section may include supporting documents, such as resumes of key team members, market research data, legal documents, and any other relevant information.

How to write a business proposal for a bank loan.

When it comes to securing a bank loan for your business, the quality of your business proposal can make all the difference. Let’s go through the process of how to write a business proposal for a bank loan.

Include critical details for the business plan in the proposal.

Your bank proposal should begin by introducing your business comprehensively. Cover essential aspects such as:

• Business overview. Introduce your business with its name, legal structure, and establishment date.
• Mission. Articulate your business’s purpose and long-term goals.
• Market analysis. Provide insights into your industry, target market, and current trends.
• Company history. Share key milestones and noteworthy achievements.
• Contact information. Include up-to-date contact details.
• Leadership team. Highlight key team members, their roles, qualifications, and relevant experience.
• Legal structure. Specify your business’s legal structure and ownership.
• Products/services. Describe your business offerings and emphasize their unique features.

Outline how you’ll pay the business loan back.

Every bank loan proposal should include some standard details like how much you need to borrow and how you’ll use the loan to advance your business.

More importantly, your business proposal should outline how you plan to pay the bank back. A few things you can write out to accomplish this include:

• Three-to-five-year sales forecasts
• Cash flow projections
• Expense estimates

The more detail you include, the better. But don’t crunch a bunch of numbers on the very first page — make sure your proposal is clearly outlined and all information is grouped logically.

Break down your backup loan repayment plan.

Part of your business proposal’s job is to convince the bank that you can pay them back, whether you meet your sales projections or not. To demonstrate this, show proof of collateral (or something that secures the loan) in case things don’t go as planned after you invest in assets like new real estate, equipment, or inventory for your business.

Simplify the business plan proposal for the bank loan process.

To enhance your business plan proposal’s effectiveness for a bank loan, consider simplifying it. Create your own business proposal and make sure you have the documents required for loan approval to jump-start your path to success. It’s easy to create a PDF online for your bank loan proposal, so it’s easily accessible to share with others for feedback.

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Home > Finance > Loans

How to Get a Small Business Loan in 7 Simple Steps

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Sooner or later, many small-business owners consider taking out a loan to supplement their business's growth. But small-business loans can be tricky lines of capital to obtain, especially if you don't know much about the application process. And with the broader banking system still reeling from the collapse of Silicon Valley Bank and Signature Bank, you’ll need a rock-solid plan and squeaky-clean paperwork before you even approach a bank.  

That preparation begins here with these seven crucial steps for nailing down a business loan.

• Establish your reason for the loan
• Learn how lenders assess you
• Determine which type of loan you need
• Decide on a lender
• Gather the right financial documents
• Apply for the loan
• Keep building your financial profile

Lendio partners with over 75 lenders, which improves your odds and efficiency to get the funding you need.

Qualifications:

$50k in revenue

6 mos. in business

560 credit score

1. Establish your reason for the loan

The lender is going to hand over a significant amount of money to your business, and they’re going to want to know how and why it’s being spent. It’s a valid concern: how you invest the loan will affect your business’s income and ability to pay it back. Stocking up inventory or covering payroll are valid reasons banks and other traditional lenders would consider your loan application. (Purchasing a recreational 3D printer for the breakroom . . . not so much.)

General rationales for small businesses seeking loans include managing daily expenses, expanding or purchasing equipment, building a cash buffer against possible future shortfalls, or just starting a business. Also, determine exactly how much money you’ll need to borrow—don’t ballpark it and end up with too much to pay back or too little to cover expenses. A loan calculator can help you determine how much you can afford to take out, interest rates and all. 

2. Learn how lenders assess you

Banks and lenders have their own formulas to determine if a loan will likely be paid back. In the case of small businesses, the formula usually involves—but isn’t limited to—five factors for consideration. Since small businesses also tend to be newer operations, they’re probably not going to excel in every area, but if they’re strong in at least three of the five, that can help level the bank’s assessment. Factors to pay attention to include the following:

• Credit score and history. If you’ve repaid loans responsibly in the past, the potential lender will find out—and they’ll also find out if you haven’t. Banks can assess business and personal financial histories through a variety of avenues, but most loan processes begin with a credit review .
• Collateral. What do you own that could cover the loan in case of default? Most banks and lenders will require something of value to shield the lender. Typical business items that qualify as collateral include real estate, buildings, vehicles, equipment, inventory, and accounts receivable.
• Cash flow. The more money your business is currently making, the less of a loan risk it’ll be to the lender. Banks and lenders will not only look at the amount of profit you’re bringing in but also examine how you’re managing it. 
• Time in business. If you’ve been functioning as a business for several years, you’re probably doing something right. Startups and newer businesses won’t have time on their side, but a solid, executable business plan for reaching milestones will go a long way toward evening the odds in the lenders’ eyes.
• Industry. What’s the forecast for your line of business? For instance, if you had a successful local brewery last year but six more are fermenting in the area this year, your competitors might start to cut into your business's profits. Lenders might take current industry trends into consideration when deciding whether or not to approval your loan request.

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3. Determine which type of loan you need

Most traditional small-business lenders have strict requirements about your business's time in business and revenue. If you’re just launching your business and haven't started earning revenue, you'll have an easier time qualifying for a personal loan over a traditional small-business loan.

But there are multiple types of loans beyond traditional personal and business loans. Here are some of the most popular options.

Common loan types overview

We've overviewed the main types of loans—now let's look at a few more details.

• Term loans. With term loans , business owners receive a lump sum of money from their lender, which they’ll repay over an agreed-upon time. Along with repaying the principal loan amount, borrowers will repay interest accrued on the loan. Term loans are best for established businesses with solid credit that need expansion cash quickly.
• SBA loans. The U.S. Small Business Administration backs bank loans that meet strict borrower guidelines. This backing instills the confidence in banks and lenders to take chances on applicants who’ve previously been turned down. SBA loan interest rates are typically low, but the approval process can take months.
• Business lines of credit.  Less rigid than a bank loan, a business line of credit gives you access to as much capital as your credit limit will allow, but you pay interest only on the cash drawn. Business lines of credit work well for covering short-term expenses or annual downtime for seasonal businesses.
• Business credit cards . Like business lines of credit, business credit cards give business owners near-instant access to a revolving line of credit. Business credit cards often come with rewards and even sign-up bonuses, which you won't get with lines of credit, but the repayment terms are typically stricter and the APR much higher. 
• Commercial real estate loans. As the name implies, commercial real estate loans are for the purchase, development, and construction of business structures—offices, storefronts, hotels, etc.—typically for lease or rent to other businesses. Terms for these loans range from less than five years up to twenty.
• Invoice factoring and financing. With invoice factoring , you sell your business’s as-yet unpaid invoices to a factoring company, which then becomes responsible for collection from your customers. Conversely, invoice financing uses those invoices as collateral for a loan. Both generate cash fast.
• Equipment financing. When you take out a loan to buy business-related equipment , the equipment itself becomes the collateral, and the terms of the loan are determined by the expected lifespan and value of the equipment. As long as it doesn’t become outdated, owning it is good for building equity.
• Microfinancing. Microloans , or short-term loans under $50,000, can help business owners build their credit score as well as their cash flow.
• Merchant cash advances. If your business makes considerable and consistent credit card sales, a merchant cash advance can be a quick source of capital. After the lump-sum loan is made, it’s paid back through a daily withholding of your credit and debit card sales or weekly bank account withdrawals. Merchant cash advances are quite risky, and the repayment terms and interest rates are brutal if you miss a payment. Typically, we recommend merchant cash advances only as a last resort, and only if you're sure you can pay them back immediately.

4. Decide on a lender

After settling on which type of loan you need, it's time to choose a lender. Not all business financing venues, or even traditional lenders, are the same. If you're not sure where to start looking for lenders, here are a few of our favorites.

Recommended lenders

Data as of 2/8/23. Offers and availability may vary by location and are subject to change. *Does not represent the typical rate for every borrower, and other fees may apply.

Main types of lenders

Banks are typically seen as the traditional place to get a loan—but as you can tell from the table above, you have quite a few options to get a loan apart from going directly to a bank. Here are some of the main types of lenders you can choose from as you consider loan applications.

Direct lenders usually include banks, wealthy investors, asset-management firms, credit unions, and other traditional lenders. These types of lenders deal one-to-one with borrowers—you don't go through a third party to acquire a direct loan. 

At Business.org, we recommend direct lenders Kabbage , OnDeck , and Accion for small businesses in dealing with financial institutions.

A lending marketplace collects loan options from networks of business funders, including traditional banks. Online lenders typically have a fast turnaround but require decent credit scores. Business.org's favorite lending marketplace is Lendio , which partners with 75 or so lenders and matches you with the best loan offers after you submit your application.

Peer-to-peer lending is a form of direct lending that lives almost exclusively online. Investors browse borrower profiles and choose businesses they’d take a chance on. (You've probably funded a few small businesses, projects, or individuals on platforms like Kickstarter and GoFundMe.) A peer-to-peer loan can come from one or several investors.

If you're interested in finding a peer-to-peer loan, we recommend looking at Lending Club and Funding Circle .

5. Gather the right financial documents

Whichever type of lender you go with or type of loan you apply for, you’ll need to present financial documents that explain where your business stands financially.

Of course, lenders will typically look at your credit score (including your FICO score, if you're taking out a personal loan to fund your business). But your credit score isn't enough information for lenders to determine whether or not you're loan-worthy ("lendable"), which is why lenders typically require an assortment of the following documents:

• Financial statements, such as profit and loss statements , cash flow statements, and balance sheets
• Business and personal credit reports
• Business and personal tax returns for at least the last year
• Business plan
• Business forecast
• State registrations and licenses
• Legal documentation, such as articles of incorporation, commercial leases, franchise agreements, etc.

6. Apply for the loan

If you’re applying for a substantial amount of money, you’ll want to allow your business plan plenty of lead time. Depending on the loan and lender, the loan application process can take months. Using some avenues, like lending marketplaces, can speed up the application and approval course, but in most cases, actually getting the money isn’t an overnight proposition for startup business loans.

Beyond the loan amount itself, tacked-on fees can take you by surprise if you’re not paying attention. Keep an eye on loan application fees, SBA loan guarantee fees, early repayment fees, and late repayment fees, as they’ll eventually affect your annual percentage rate (APR). By the time you apply, you should have a reasonable level of comfort with your ability to repay the loan on time and with the payment schedule, the APR, and the included fees. 

Remember, you want to know how much the loan will ultimately cost, interest and all. As you're getting your documents in order and starting the application process, use a loan calculator to ensure you're taking out the right amount of money. 

7. Keep building your financial profile

Improving personal credit, establishing business credit , paying down existing debts, maximizing income, expanding assets—these are all ways to build up your financial profile for future growth. It may seem backward, but banks prefer lending to businesses that don’t desperately need the money. It’s in your best interest to negotiate from a position of capital power.

While running your own operation doesn’t necessarily get easier, your future small-business loan processes will become more painless going forward, now that you’ve begun building your financial profile. Establish and build your business credit, and  then you’ll be able to rely upon yourself instead of playing the economic odds.

Alternatives to business loans

Personal loans.

Newer businesses may not qualify for many small business loans — that’s where personal loans come in. Personal loans are authorized based primarily on your personal credit score .

Some personal lenders, like Upstart , will approve loans to individuals whose credit scores are as low as 300. But most personal loan providers require at least a 580 credit score.

Personal loans can range from $1,000 to $100,000 with an interest rate span of 5.99% to 35.95%. In order to qualify for higher amounts, you’ll likely need to secure the loan with some kind of collateral . 

Your personal credit and assets are liable in the event of defaulting on a personal loan. With many business loans, only business assets will be at stake. But, as long as you’re comfortable with the risks, a personal loan can be another way to secure financing.

Personal credit cards

Personal credit cards are a great way to build credit in pursuit of a wider variety of lending options. Credit card APR ranges from 15.16% to 24%+ depending on your credit score.

If you have a credit score below 579, your lender may only offer a secured credit card where you make a cash deposit as collateral. You won’t have as much borrowing power because your credit limit will be a percentage of your collateral. Still, a secured credit card can help you build credit. 

Your lender will decide your credit limit, but the average limit is around $13,000. The key to building credit — no matter your limit — is to consistently make your payments on time. Keep up with that and you’ll be able to apply for better lending products in no time.

The takeaway

Depending on if you have an established business or are just starting out, there are many attainable ways to get funding via small-business loans, including personal loans for first-time small-business owners.

Take a look at your financial wellbeing, documentation, and consider applying for a loan through your local bank, the SBA, or the multitude of online lenders—keeping in mind their specific fees and borrowing terms.

Wherever you’re at in your business journey, there are multiple options available for a first-time business loan.

Want to learn more about small business loans and financing? Check out our ultimate guide to small-business loans.

Related reading

• SBA Loan Rates Explained

Best Small Business Loans

• How to Apply for a Business Credit Card
• How to Build Business Credit: 5 Steps for Improving Your Business Credit Score

Small Business Loan FAQs

Some business lenders require around $10,000 of revenue per month while many require $30,000 or more per month. Your business revenue requirements depend on where you apply and what kind of loan you’re applying for. Be sure to check your lender requirements before you apply.

Yes. There are a few ways to approach securing a loan with bad credit . You can apply for a secure or collateralized loan or apply for a lending product that isn’t related to your credit score — something like an invoice factoring loan . 

You can also apply for microloans , some of which have no minimum requirements. Additionally, there are lending marketplaces like Lendio that send your application to multiple lenders.

No. Many small businesses loans are easy to obtain. Take Lendio’s small business loans , for example. You fill out a 15-minute loan application and Lendio sends your request to a marketplace of lenders who will make you offers. Just like that, you have business loans available to you.

That said, there are some factors that may make securing a loan for your business more difficult. If you have poor business credit or your business is relatively new, for example, it may be difficult to get approved for a loan.

You may still be able to apply for a personal loan if your business credentials aren’t solid yet. 

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

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How to write an effective business plan in 11 steps (with workbook)

February 02, 2023 | 14 minute read

Writing a business plan is a powerful way to position your small business for success as you set out to meet your goals. Landmark studies suggest that business founders who write one are 16% more likely to build viable businesses than those who don’t and that entrepreneurs focused on high growth are 7% more likely to have written a business plan. 1 Even better, other research shows that owners who complete business plans are twice as likely to grow their business successfully or obtain capital compared with those who don’t. 2

The best time to write a business plan is typically after you have vetted and researched your business idea. (See How to start a business in 15 steps. ) If conditions change later, you can rewrite the plan, much like how your GPS reroutes you if there is traffic ahead. When you update your plan regularly, everyone on your team, including outside stakeholders such as investors, will know where you are headed.

What is a business plan?

Typically 15-20 pages long, a business plan is a document that explains what your business does, what you want to achieve in the business and the strategy you plan to use to get there. It details the opportunities you are going after, what resources you will need to achieve your goals and how you will define success.

Why are business plans important?

Business plans help you think through barriers and discover opportunities you may have recognized subconsciously but have not yet articulated. A business plan can also help you to attract potential lenders, investors and partners by providing them with evidence that your business has all of the ingredients necessary for success.

What questions should a business plan answer?

Your business plan should explain how your business will grow and succeed. A great plan will provide detailed answers to questions that a banker or investor will have before putting money into the business, such as:

• What products or services do you provide?
• Who is your target customer?
• What are the benefits of your product and service for customers?
• How much will you charge?
• What is the size of the market?
• What are your marketing plans?
• How much competition does the business face in penetrating that market?
• How much experience does the management team have in running businesses like it?
• How do you plan to measure success?
• What do you expect the business’s revenue, costs and profit to be for the first few years?
• How much will it cost to achieve the goals stated in the business plan?
• What is the long-term growth potential of the business? Is the business scalable?
• How will you enable investors to reap the rewards of backing the business? Do you plan to sell the business to a bigger company eventually or take it public as your “exit strategy”?

How to write a business plan in 11 steps

This step-by-step outline will make it easier to write an effective business plan, even if you’re managing the day-to-day demands of starting a new business. Creating a table of contents that lists key sections of the plan with page numbers will make it easy for readers to flip to the sections that interest them most.

• Use our editable workbook to capture notes and organize your thoughts as you review these critical steps. Note: To avoid losing your work, please remember to save this PDF to your desktop before you begin.

1. Executive summary

The executive summary is your opportunity to make a great first impression on investors and bankers. It should be just as engaging as the enthusiastic elevator pitch you might give if you bumped into a potential backer in an elevator.

In three to five paragraphs, you’ll want to explain what your business does, why it will succeed and where it will be in five years. The executive summary should include short descriptions of the following:

• Business concept. What will your business do?
• Goals and vision. What do you expect the business to achieve, both financially and for other key stakeholders, such as the community?
• Product or service. What does your product or service do — and how is it different from those of competitors?
• Target market. Who do you expect to buy your product or service?
• Marketing strategy. How will you tell people about your product or service?
• Current revenue and profits. If your business is pre-revenue, offer sales projections.
• Projected revenue and profits. Provide a realistic look at the next year, as well as the next three years, ideally.
• Financial resources needed. How much money do you need to borrow or raise to fund your plan?
• Management team. Who are the company’s leaders and what relevant experience will they contribute?

2. Business overview

Here is where you provide a brief history of the business and describe the product(s) or service(s) it offers. Make sure you describe the problem you are attempting to solve, for whom you will solve it (your customers) and how you will solve it. Be sure to describe your business model (such as direct-to-consumer sales through an online store) so readers can envision how you will make sales. Also mention your business structure (such as a sole proprietorship , general partnership, limited partnership or corporation) and why it is advantageous for the business. And be sure to provide context on the state of your industry and where your business will fit into it.

3. Business goals and vision

Explain what you hope to achieve in the business (your vision) as well as its mission and value proposition. Most founders judge success by the size to which they grow the business using measures such as revenue or number of employees. Your goals may not be solely financial. You may also wish to provide jobs or solve a societal problem. If that’s the case, mention those goals as well.

If you are seeking outside funding, explain why you need the money, how you will put it to work to grow the business and how you expect to achieve the goals you have set for the business. Also explain your exit strategy—that is, how you would enable investors to cash out, whether that means selling the business or taking it public.

4. Management and organization

Many investors say they bet on the team behind a business more than the business idea, trusting that talented and experienced people will be capable of bringing sound business concepts to life. With that in mind, make sure to provide short bios of the key members of your management team (including yourself) that emphasize the relevant experience each individual brings, along with their special talents and industry recognition. Many business plans include headshots of the management team with the bios.

Also describe more about how your organization will be structured. Your company may be a sole proprietorship, a limited liability company (LLC) or a corporation in one or more states.

If you will need to hire people for specific roles, this is the place to mention those plans. And if you will rely on outside consultants for certain roles — such as an outsourced CFO — be sure to make a note of it here. Outside backers want to know if you’ve anticipated the staffing you need.

5. Service or product line

A business will only succeed if it sells something people want or need to buy. As you describe the products or services you will offer, make sure to explain what benefits they will provide to your target customers, how they will differ from competing offerings and what the buying cycle will likely be so it is clear that you can actually sell what you are offering. If you have plans to protect your intellectual property through a copyright or patent filing, be sure to mention that. Also explain any research and development work that is underway to show investors the potential for additional revenue streams.

6. Market/industry analysis

Anyone interested in providing financial backing to your business will want to know how big your company can potentially grow so they have an idea of what kind of returns they can expect. In this section, you’ll be able to convey that by explaining to whom you will be selling and how much opportunity there is to reach them. Key details to include are market size; a strengths, weaknesses, opportunities and threats (SWOT) analysis ; a competitive analysis; and customer segmentation. Make it clear how you developed any projections you’ve made by citing interviews or research.

Also describe the current state of the industry. Where is there room for improvement? Are most companies using antiquated processes and technology? If your business is a local one, what is the market in your area like? Do most of the restaurants where you plan to open your café serve mediocre food? What will you do better?

In this section, also list competitors, including their names, websites and social media handles. Describe each source of competition and how your business will address it.

7. Sales and marketing

Explain how you will spread the word to potential customers about what you sell. Will you be using paid online search advertising, social media promotions, traditional direct mail, print advertising in local publications, sponsorship of a local radio or TV show, your own YouTube content or some other method entirely? List all of the methods you will use.

Make sure readers know exactly what the path to a sale will be and why that approach will resonate with customers in your ideal target markets as well as existing customer segments. If you have already begun using the methods you’ve outlined, include data on the results so readers know whether they have been effective.

8. Financials

In a new business, you may not have any past financial data or financial statements to include, but that doesn’t mean you have nothing to share. Preparing a budget and financial plan will help show investors or bankers that you have developed a clear understanding of the financial aspects of running your business. (The U.S. Small Business Administration (SBA) has prepared a guide you can use; SCORE , a nonprofit organization that partners with the SBA, offers a financial projections template to help you look ahead.) For an existing business, you will want to include income statements, profit and loss statements, cash flow statements and balance sheets, ideally going back three years.

Make a list of the specific steps you plan to take to achieve the financial results you have outlined. The steps are generally the most detailed for the first year, given that you may need to revise your plan later as you gather feedback from the marketplace.

Include interactive spreadsheets that contain a detailed financial analysis showing how much it costs your business to produce the goods and services you provide, the profits you will generate, any planned investments and the taxes you will pay. See our startup costs calculator to get started.

9. Financial projections

Creating a detailed sales forecast can help you get outside backers excited about supporting you. A sales forecast is typically a table or simple line graph that shows the projected sales of the company over time with monthly or quarterly details for the next 12 months and a broader projection as much as five years into the future. If you haven’t yet launched the company, turn to your market research to develop estimates. For more information, see “ How to create a sales forecast for your small business. ”

10. Funding request

If you are seeking outside financing such as a loan or equity investment, your potential backers will want to know how much money you need and how you will spend it. Describe the amount you are trying to raise, how you arrived at that number and what type of funding you are seeking (such as debt, equity or a combination of both). If you are contributing some of your own funds, it is worth noting this, as it shows that you have skin in the game.

11. Appendix

This should include any information and supporting documents that will help investors and bankers gain a greater understanding of the potential of your business. Depending on your industry, you might include local permits, licenses, deeds and other legal documents; professional certifications and licenses; media clips; information on patents and other intellectual property; key customer contracts and purchase orders; and other relevant documents.

Some business owners find it helpful to develop a list of key concepts, such as the names of the company’s products and industry terms. This can be helpful if you do business in an industry that may not be familiar to the readers of the business plan.

Tips for creating an effective business plan

Use clear, simple language. It’ll be easier to win people over if your plan is easy to read. Steer clear of industry jargon, and if you must use any phrases the average adult won’t know, be sure to define them.

Emphasize what makes your business unique. Investors and bankers want to know how you will solve a problem or gap in the marketplace differently from anyone else. Make sure you’re conveying your differentiating factors.

Nail the details. An ideal business plan will be detailed and accurate. Make sure that any financial projections you make are realistic and grounded in solid market research. (If you need help in making your calculations, you can get free advice at SCORE.) Seasoned bankers and investors will quickly spot numbers that are overly optimistic.

Take time to polish it. Your final version of the plan should be neat and professional with an attractive layout and copy that has been carefully proofread.

Include professional photos. High-quality shots of your product or place of business can help make it clear why your business stands out.

Updating an existing business plan

Some business owners in rapidly growing businesses update their business plan quarterly. Others do so every six months or every year. When you update your plan make sure you consider these three things:

• Are your goals still current? As you’ve tested your concept, your goals may have changed. The plan should reflect this.
• Have you revised any strategies in response to feedback from the marketplace? You may have found that your offerings resonated with a different customer segment than you expected or that your advertising plan didn’t work and you need to try a different approach. Given that investors will want to see a marketing and advertising plan that works, keeping this section current will ensure you are always ready to meet with one who shows interest.
• Have your staffing needs changed? If you set ambitious goals, you may need help from team members or outside consultants you did not anticipate when you first started the business. Take stock now so you can plan accordingly.

Final thoughts

Most business owners don’t follow their business plans exactly. But writing one will get you off to a much better start than simply opening your doors and hoping for the best, and it will be easier to analyze any aspects of your business that aren’t working later so you can course-correct. Ultimately, it may be one of the best investments you can make in the future of your business.

Business plan FAQs

What are common mistakes when writing a business plan.

The biggest mistake you can make when writing a business plan is creating one before the idea has been properly researched and tested. Not every idea is meant to become a business. Other common mistakes include:

• Not describing your management team in a way that is appealing to investors. Simply cutting and pasting someone’s professional bio into the management section won’t do the trick. You’ll want to highlight the credentials of each team member in a way that is relevant to this business.
• Failing to include financial projections — or including overly optimistic ones. Investors look at a lot of business plans and can tell quickly whether your numbers are accurate or pie in the sky. Have a good small business accountant review your numbers to make sure they are realistic.
• Lack of a clear exit strategy for investors. Investors may want the option to cash out eventually and would want to know how they can go about doing that.
• Slapdash presentation. Make sure to fact-check any industry statistics you cite and that any charts, graphs or images are carefully prepared and easy to read.

What are the different types of business plans?

There are a variety of styles of business plans. Here are three major types:

Traditional business plan. This is a formal document for pitching to investors based on the outline in this article. If your business is a complicated one, the plan may exceed the typical length and stretch to as many as 50 pages.

One-page business plan. This is a simplified version of a formal business plan designed to fit on one page. Typically, each section will be described in bullet points or in a chart format rather than in the narrative style of an executive summary. It can be helpful as a summary document to give to investors — or for internal use. Another variation on the one-page theme is the business model canvas .

Lean plan. This methodology for creating a business plan is ideal for a business that is evolving quickly. It is designed in a way that makes it easy to update on a regular basis. Lean business plans are usually about one page long. The SBA has provided an example of what this type of plan includes on its website.

Is the business plan for a nonprofit different from the plan for other business types?

Many elements of a business plan for a nonprofit are similar to those of a for-profit business. However, because the goal of a nonprofit is achieving its mission — rather than turning a profit — the business plan should emphasize its specific goals on that front and how it will achieve them. Many nonprofits set key performance indicators (KPIs) — numbers that they track to show they are moving the needle on their goals.

Nonprofits will generally emphasize their fundraising strategies in their business plans rather than sales strategies. The funds they raise are the lifeblood of the programs they run.

What is the difference between a business plan, a strategic plan and a marketing plan?

A strategic plan is different from the type of business plan you’ve read about here in that it emphasizes the long-term goals of the business and how your business will achieve them over the long run. A strong business plan can function as both a business plan and a strategic plan.

A marketing plan is different from a business plan in that it is focused on four main areas of the business: product (what you are selling and how you will differentiate it), price (how much your products or services will cost and why), promotion (how you will get your ideal customer to notice and buy what you are selling) and place (where you will sell your products). A thorough business plan may cover these topics, doing double duty as both a business plan and a marketing plan.

Explore more

Editable business plan workbook

Starting a new business

1 . Francis J. Green and Christian Hopp. “Research: Writing a Business Plan Makes Your Startup More Likely to Succeed.” HBR. July 14, 2017. Available online at https://hbr.org/2017/07/research-writing-a-business-plan-makes-your-startup-more-likely-to-succeed.

2 . CorpNet, “The Startup Business Plan: Why It’s Important and How You Can Create One,” June 29, 2022.

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Documents you need for a startup business loan

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Key takeaways

• The application process for a startup loan may differ from other types of business loans.
• When business documentation is limited, lenders may request personal financial documents and a business plan for startup loans.
• Business plans can provide clarity and direction, attract investors and help you secure financing.

Startup business loans can help entrepreneurs secure funding for equipment, inventory and other costs to get their business off the ground, but securing funding can be challenging for younger businesses. In fact, the 2022 Small Business Credit Survey by the Federal Reserve Banks revealed that only 37 percent of employer firms under two years old received full approval for loan applications.

Because startup businesses have a limited financial runway, the application process may differ from a conventional business loan. For example, the documents needed will likely focus more closely on your personal financial history to assess creditworthiness. Although document requirements vary by lender for startup loans , having them handy will save you time if they are required and help you answer any questions the lender poses.

Documents about yourself

Assuming there is limited documentation available about your business, lenders may want to see substantial information about your personal finances and business plan before issuing a loan. Background information you will want to have on hand include:

• Your address (and, if different, your business address)
• Social Security number
• Date of birth
• Personal bank statements
• Personal tax returns

Documents about your business

Lenders want to know your business is legitimate and that you own it. They’ll also look for early signs your business is heading for success. Gather:

• Business tax returns (if available) 
• Business bank account statements (if available)
• Receipts from quarterly tax payments
• Profit and loss statements 
• EIN ( Employer Identification Number ): This acts much like a Social Security number for payments and tax documents. You can apply for one online through the IRS.
• Business licenses and permits, if applicable
• Foundational documents, including articles of incorporation
• Outstanding invoices, especially if you’re applying for invoice factoring

Business plan

Writing a business plan can help you develop a clear vision for the path ahead and can help build confidence and buy-in from potential investors. A good startup business plan will include the following elements:

An executive summary : This introduction provides an overview of your business, its objectives, and why you will be successful. Keep this section brief: ideally, two pages or less. Introduce information about:

• Your business and its products or services
• The target market being served
• Your key qualifications as a business owner
• Information about the organizational structure of your business
• Pertinent background information about your business and/or market sector
• Funding information: Any capital dedicated to date and its sources, as well as your plans for future funding

Your company description : Think of this as your elevator pitch. What problem is your business solving? What differentiates it from competitors in the field?

Market research : Show your understanding of the current market conditions; underscore any noticeable themes from successful businesses in your industry.

Your product or service : Go into more detail here than was provided in your executive summary.

Marketing plan: Describe how you will build and retain a customer base.

Funding request : Go into detail here about why you are requesting funds and how this money will be used. 

Other documents

Other documents you may need as you prepare for a startup loan application include the following: 

• Collateral information : Documents related to any assets that belong to the company. This can include equipment, technology, vehicles, real estate and bank accounts. You may need to include an appraisal to prove the asset’s worth.
• Personal guarantee : A clause in your loan agreement stating you take personal liability for the debt.
• Business loan proposal : This document outlines the financial needs and repayment plan if a business secures a loan.

Documents for a startup SBA loan  

In addition to the documents listed above, applications for Small Business Administration-backed startup loans require extra documentation. Be prepared also to provide:

• Financial plan: Describe your projections for the next one to five years. This should inspire confidence in lenders about the stability of your business.
• Appendices: Any supporting documents that may strengthen your funding request and provide more context about your business.
• SBA forms:  The SBA has its own application forms you must complete. Requirements will vary by the type of SBA loan . For example, 7(a) loans require Form 1919 and Form 1920 .

Many entrepreneurs require financial support to kickstart their ventures. If you’ve just launched your business and need financing, consider working with a lender specializing in startup loans , such as:

• Fora Financial

You can also check out our guide on getting a business loan with no money .

The bottom line

Lining up your documentation in advance can ensure a straightforward application process once you are ready to apply for funding. Having the information handy can also demonstrate your readiness to secure funding and grow as a business. 

Once you collect this paperwork, you can use these documents to apply for other kinds of business loans and business lines of credit .

Frequently asked questions

What credit score is needed for a business startup loan, what are the requirements to get a loan to start a business, is it hard to get a startup business loan.

Article sources

We use primary sources to support our work. Bankrate’s authors, reporters and editors are subject-matter experts who thoroughly fact-check editorial content to ensure the information you’re reading is accurate, timely and relevant.

" 2023 Firms in Focus: Findings from the 2022 Small Business Credit Survey. " Fed Small Business. Accessed on October 31, 2023.

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How to Get a Startup Business Loan With No Money

In this article, understanding your financing needs, government resources, state and local government grants, private company grants, preparation stage: document gathering, traditional banks, non-traditional lenders, small business development centers (sbdcs), minority business development agency (mbda) centers, fast break for small business, choosing the right business loan.

Imagine turning your groundbreaking idea into a thriving business, only to hit a wall when it comes to funding. This is a common narrative for many budding entrepreneurs who find themselves with vision and drive but insufficient capital. Startups often face significant hurdles in securing the financial backing they need to scale operations, develop products, and even keep the lights on. The stark reality is that without adequate funding, many innovative ideas may never see the light of day.

This article aims to demystify the process of securing funding for startups, particularly when financial resources are scant. Understanding the importance of this funding is crucial, not only for survival but for the potential to flourish in a competitive market. We’ll explore effective strategies and practical steps to navigate the often daunting world of small business loans and financial support. Whether you’re looking to cover operational costs, expand your burgeoning business, or innovate with new product development, the right approach to financing can open doors that seemed firmly shut.

Before diving into the world of business loans and funding, it’s imperative to pinpoint exactly why your startup needs financing. This initial step is more than a formality; it’s a strategic move that sets the stage for your funding journey. Are you looking to keep up with operational costs such as rent, salaries, and utilities? Or is your goal to expand your business, requiring funds for new locations, marketing campaigns, or hiring additional staff? Perhaps you’re in the throes of developing a revolutionary new product that demands significant investment in research and development.

Articulating clear financial goals is not just about knowing how much money you need—it’s about understanding how you intend to use that money to generate growth. Lenders and investors are more likely to support a venture that presents a well-defined pathway to profitability. By delineating your financial needs, you not only clarify your own strategy but also enhance your credibility with potential financiers. A clear, detailed financial plan demonstrates your commitment to managing funds responsibly and achieving specific business milestones.

In the next sections, we’ll look into how you can prepare your startup for the scrutiny of lenders, pinpoint the right type of loan for your needs, and navigate the application process to maximize your own money and chances of success. Stay tuned as we unpack the essentials of securing that much-needed capital for your startup.

Exploring Free Funding Options

Securing a business loan is a common route for funding, but it’s not the only one—especially for startups with limited funds or those looking to minimize debt early on. Free funding options such as grants present an invaluable opportunity. Unlike traditional business loans, grants do not require repayment, making them a particularly attractive option for nascent enterprises looking to keep financial liabilities low. Specifically, business grants offer access to funds without the need to repay, providing a significant advantage for startups by offering free capital that can be used for a variety of purposes.

The government can be a pivotal resource for obtaining startup funding. Federal programs like the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) are designed specifically to support small businesses engaged in research and development with high potential for commercialization. These grants are competitive but can provide substantial financial support to help bring innovative ideas to market.

Beyond federal programs, many state and local governments offer grants tailored to promote economic growth within their jurisdictions. These grants often focus on specific industries, such as technology, healthcare, or sustainable energy, aligning with the strategic interests of the state or region. For instance, some states provide grants for startups that promise job creation or revitalize economically depressed areas. Navigating these options requires a good understanding of what each state and locality offers, which can usually be found on their official government websites.

Private entities and corporations also offer grants to encourage the development of startups. These are often part of corporate social responsibility initiatives or efforts to foster innovation that complements their own business objectives. A notable example is the Venmo Small Business Grant , which provides financial assistance to small businesses that demonstrate potential for growth and community impact. Other companies across various industries may offer similar grants, each with its own set of criteria and objectives.

For startups, the key to tapping into these free funding options lies in understanding which grants align best with their specific business goals and sectors. Successful applications typically require a detailed business plan, clear objectives, and a demonstration of how the grant will facilitate progress toward these goals. By thoroughly researching and targeting the right grants, startups can secure critical funding while preserving equity and avoiding debt.

Before diving into applications for grants and loans, it’s crucial to prepare and organize the necessary documentation. This step is foundational, as a well-documented loan or grant application increases your chances of success significantly. Here’s a rundown of common documents that startups need to gather:

Business Plan : Perhaps the most critical document, your business plan should detail your business model, market analysis, operational strategy, and financial projections. It acts as a roadmap for your business and a pitch to your potential funders.

Financial Statements : These include balance sheets, income statements, and cash flow statements. They provide a snapshot of your business’s financial health and are essential for lenders and grant agencies to assess risk.

Tax Returns : Recent tax returns (both personal and business) may be required to verify your financial history and integrity.

Credit Reports : These may be needed to assess creditworthiness, particularly for loan applications. Ensure your credit history is accurate and up-to-date.

For loan applications, startups should also be prepared to review and sign a ‘loan agreement’, which outlines the terms of the loan and is a critical step before receiving funding.

Additional documents might be required for specific grants or loans, such as SBA microloans. These could include business licenses, articles of incorporation, detailed plans for fund usage, or proof of collateral.

Where to Apply for Startup Loans

Once your documents are in order, knowing where to apply can streamline the process and improve your chances of obtaining financing. Many lenders may require a ‘personal guarantee’ from borrowers, especially for startups without a financial history, to secure a loan or business credit card . This means being personally responsible for loan repayment if the business cannot fulfill its obligations, often required in the absence of collateral.

Traditional banks are often the first thought for many entrepreneurs seeking business loans. However, their criteria can be stringent, focusing on credit scores , the business’s financial history, and profitability. Startups, particularly those without extensive financial history, and online lenders may find it challenging to meet these criteria but should still consider this option, especially if they have strong personal credit or collateral.

The Small Business Administration (SBA) offers several loan programs designed to support small businesses that might not qualify for traditional bank loans. The startup SBA loan process typically involves more detailed documentation and a robust business plan . The SBA doesn’t lend directly but guarantees loans provided through partner lenders, reducing the lender’s risk and often enabling better terms for the borrower.

For startups unable to secure traditional bank loans or SBA loans, non-traditional lenders may be a viable alternative. Platforms like IFundWomen cater specifically to women entrepreneurs, offering crowdfunding opportunities combined with grants and coaching. Business credit cards are another avenue, providing a flexible way to finance immediate expenses and build a personal credit score. However, it’s important to be mindful of potentially high-interest rates.

In each of these venues, the key is to tailor your application to the specific requirements and preferences of the lender, financial institution, or granting body. Preparation, thorough documentation, and a strategic approach to selecting funding sources are critical components that can dramatically increase your chances of securing the financial support your startup needs.

Support Resources

Navigating the world of startup financing requires more than just a solid business plan and thorough documentation; it also demands understanding and leveraging the right resources for small business owners . Thankfully, several organizations are dedicated to helping small businesses succeed:

SBDCs are fantastic resources for startup entrepreneurs. Located across the country, these centers offer free business finance consulting and at-cost training services. They play a crucial role in advising and preparing for loan applications by helping refine business plans, offering financial forecasting, and providing insights into the local market. SBDC advisors can also guide startups through the application process for various financing options, ensuring that entrepreneurs are well-prepared and their applications are as robust as possible.

MBDA Centers offer specialized support for minority-owned businesses. These centers provide expert guidance on securing capital, competing for contracts, and navigating the challenges that minority businesses often face. With dedicated advisors, MBDA Centers help streamline the process of obtaining grants and loans, offering tailored advice that addresses the specific needs of minority entrepreneurs.

Types of Small Business Loans Available

For startups, especially those with limited funds, choosing the right type of loan is crucial. Here’s a breakdown of several types of loans that are suitable for startups with minimal capital:

Microloans : These small loans are perfect for startups needing modest funding. They can be used for various purposes, including buying inventory, paying startup costs, or funding initial hires. Organizations like the SBA offer microloan programs, specifically targeting small businesses that need less than $50,000.

Business Credit Cards : While not a traditional loan, business credit cards offer a flexible way to manage cash flow and can provide a quick infusion of capital. They are particularly useful for everyday expenses and can also help build a business’s credit profile.

An example of a targeted grant program is the Fast Break for Small Business initiative. This program is designed to support small businesses, providing not only funding but also resources to foster growth and stability. Such programs often focus on specific communities or sectors, aiming to make a direct impact by alleviating some of the financial pressures on startups.

Understanding these resources and different types of loans can empower entrepreneurs to make informed financial decisions themselves, aligning their financing strategies with their business goals and operational needs. By leveraging both support networks and appropriate financing options, startups can overcome the initial financial challenges, paving the way for sustained growth and success.

When selecting a business loan, consider the following factors to ensure it suits your startup’s needs:

Interest Rates : Compare interest rates to determine the cost of borrowing. Lower rates mean lower overall costs, but they often come with stricter eligibility criteria.

Repayment Terms : Understand the loan’s repayment terms, including the duration, flexibility in repayment schedules, and penalties for early repayment.

Eligibility Criteria : Ensure that your startup meets the eligibility criteria for the loan. This can include financial metrics, business age, and owner’s credit score .

Loan Offer Comparison : Use loan comparison tools or consult with financial advisors to compare different offers. Look beyond interest rates and consider factors like additional fees, loan term lengths, and lender reliability.

Choosing the right business loan is about balancing the cost of borrowing with the benefits it will bring to your company. By carefully considering these factors, you can select a loan that not only meets your immediate financial needs but also supports your long-term business objectives.

Navigating the funding landscape is crucial for transforming your startup idea into a successful business. This article has provided you with strategies to identify your financing needs, explore free funding options like grants, and prepare effectively for loan applications. We’ve also discussed the importance of choosing the right type of loan based on interest rates, repayment terms, and eligibility criteria.

Take advantage of these resources and outlined strategies to effectively overcome financial barriers. By carefully selecting and applying for the appropriate grants and loans, you can secure the necessary funding to grow and sustain your business. Let these insights guide you toward making informed decisions that pave the way for your personal finance and startup’s success.

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The deadline to consolidate some student loans to receive forgiveness is here. Here’s what to know

President Joe Biden delivers remarks on student loan debt at Madison College, Monday, April 8, 2024, in Madison, Wis. (AP Photo/Evan Vucci)

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NEW YORK (AP) — Borrowers with some types of federal student loans have until today to consolidate their loans to qualify for full student loan cancellation or credit toward cancellation. The Education Department is expected to conduct a one-time adjustment in the summer but borrowers who want to be considered for the adjustment have to submit a request to consolidate their loans by Tuesday.

This one-time adjustment is meant to show a more accurate payment count for student loan borrowers.

Here’s what you need to know:

WHICH TYPES OF LOANS NEED TO BE CONSOLIDATED?

Borrowers with these types of loans must consolidate first to take advantage of this one-time adjustment:

— Commercially managed Federal Family Education Loan (FFEL) loans

— Parent PLUS loans

— Perkins loans

— Health Education Assistance Loan (HEAL) Program loans

You can learn more about the one-time adjustment at studentaid.gov .

WHEN IS THE DEADLINE?

The deadline to consolidate your loans is Tuesday.

WHAT IS LOAN CONSOLIDATION?

If you have multiple federal student loans, you can combine them into one loan with fixed interest. If you decide to consolidate your loans into a Direct Consolidation Loan, you can do so for free. Once you have consolidated your loans, you will have one monthly payment instead of multiple payments a month.

HOW DO I APPLY TO CONSOLIDATE MY LOANS?

You can apply to consolidate your loans at studentaid.gov/loan-consolidation . The consolidation process typically takes around 60 days to complete. Once you consolidate your loans, you will be eligible for the adjustment.

WHEN WILL I HEAR BACK IF MY LOANS ARE CANCELLED OR I RECEIVED CREDIT?

The Education Department is currently adjusting borrowers’ accounts and expects to finish by July 1.

The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.