Write a business plan for financing

The principle

Explain the customer problem, product or service, target market, operating model, management, and competitive position. Describe the specific financing request, how funds will be used, and what changes after the investment. Connect the narrative to a budget and forecast rather than treating the financial section as a separate exercise.

Put it into practice

Support assumptions with customer evidence, actual operating results, supplier quotes, or relevant market research. State what is known and what remains uncertain. For an expansion, distinguish current business performance from the new project. For an acquisition, explain transition responsibilities and how the combined business will generate cash.

What people often miss

A lender needs a repayment case, not only a growth story. Show what happens if sales start later or costs rise. Avoid generic market-size figures that never connect to obtainable customers. Keep versions current and ensure the requested amount, dates, and financial assumptions agree across the plan, application, and supporting documents.

Make the financing request testable

A fictional café wants to add an evening service. Instead of saying the local market is large, its plan identifies twenty additional seats, two possible sittings, expected occupancy and spending per customer. At twenty seats, two sittings, 50% occupancy and $30 per customer, projected evening revenue is $600 per open night. With twenty nights per month, that is $12,000 of monthly sales before taxes, discounts or cancellations.

That calculation is only a starting hypothesis. Support occupancy with trials or comparable operating evidence, then budget food, additional labour, utilities and marketing. Check whether the existing kitchen can serve the extra volume. If added monthly cash costs are $9,500, only $2,500 remains before financing payments and any omitted costs. The plan becomes more useful when the repayment case follows these operating assumptions instead of starting with a desired loan amount.

Source: SBA: business planning and startup costs

Connect milestones, evidence and downside actions

Use a clear sequence: current business, opportunity, proposed investment, implementation dates, financial impact and repayment source. Distinguish actual results from forecasts on every chart. Attach supplier quotations, relevant contracts and management experience where they support a key assumption. A long generic market section does little if it cannot explain who will buy, when they will pay and why this business can deliver.

For the café, test half the planned incremental revenue and a later launch. Identify which costs reduce with sales and which remain fixed. State what the owner would change if results disappoint: opening fewer nights, postponing nonessential purchases or stopping the expansion before more cash is committed. The lender may have a preferred format or forecasting horizon, so confirm those requirements. Keep one dated version of the plan aligned with the application and cash model. A persuasive narrative that disagrees with the numbers makes diligence harder.

• Which assumptions determine most of the repayment capacity?
• What evidence supports customer demand and delivery capacity?
• Are spending dates matched to funding and opening dates?
• Which action reduces losses if sales arrive later or at a lower level?

Source: BDC: business loan checklist

Your next-step checklist

• Clear use of funds and project outcomes
• Evidence for commercial assumptions
• Integrated financial forecast
• Downside plan and consistent application details