Previously: Assessing and Improving Your Financial Health
Your business plan is more than a formality. It's the blueprint for your business and a powerful tool to show lenders that you’re prepared, focused and serious about growth. In this post, you’ll have a chance to review the elements of a strong business plan, how to align that plan with lender expectations, as well as ideas for revising it to reflect your progress and address previous lender concerns.
What Makes a Strong Business Plan?
A solid business plan clearly and concisely tells the story of your business, including where you’ve been, where you’re going and how you plan to get there. Lenders want to see that you’ve done your homework and have a realistic path to profitability.
Here are the key components to a strong, lender-friendly business plan:
- Executive Summary – A brief overview of your business, mission and what you're asking for.
- Company Overview – What your business does, your structure, your leadership team and what sets you apart.
- Market Research & Competitive Analysis – Who your customers are, how big the market is and how you stack up against competitors.
- Marketing & Sales Strategy – How you plan to attract and retain customers, including pricing, promotion and sales tactics.
- Operational Plan – How your business runs on a day-to-day basis, including staffing, production, logistics and suppliers.
- Financial Projections – A three to five-year forecast that includes projected revenue, expenses, cash flow and profit. Be realistic, but optimistic. This is where your financial story should shine.
Making Your Plan Loan-Ready
When you're revising your plan after a loan denial — or preparing to apply for the first time —think like a lender. Primarily, lenders want to know if the applicant can pay back the loan.
To answer that as clearly as possible, your business plan should:
- Demonstrate your capacity to repay by clearly projecting revenues, showing consistent cash flow and identifying multiple revenue streams.
- Highlight your growth potential by painting a picture of where your business is headed and how the loan will support that journey.
- Include a specific project budget that breaks down how you'll use the loan funds.
- Explain the sources and uses of funds, including how much of your own capital you're investing.
The more transparent and detailed you are, the more confident a lender will feel in your plan.
Revising Your Plan After a Denial
If you’ve already applied and been denied, use the feedback from your lender as a roadmap for revisions. Update your plan to:
- Address any concerns raised during the review. Did the lender want to see stronger financials, more marketing strategy or a clearer repayment plan?
- Highlight progress since your last application, such as new contracts, increased revenue, improved credit or operational efficiencies.
- Include updated financials and projections based on your latest performance and insights.
Remember, your business plan isn’t a one-time document. It should grow and evolve with your business. Make sure to reach out to The Iowa Center for more questions about revising and strengthening your business plan!
Next up: Building Your Creditworthiness and Trust with Lenders
