How to Create a Great Business Plan for a Commercial Loan

Among all the paper work, meetings with your direct lender, and invested time to get approved for a commercial business loan, your business plan is perhaps the first and most important step in efforts to receive the funds your business requires.

Short of having an MBA from Harvard Business School or being a natural-born financial-whiz, business plans are not as difficult as they seem. You just have to be realistic, clearly present the overall objectives, and ensure it covers all the important criteria a direct lender is looking for. After all, business plans are always a first impression and it’s vital to present your business in the best possible way.

While there are many stipulations to draft a great business plan, The Business Development Bank of Canada (BDC) suggests a few tips in efforts to get your loan request moving in the right direction.

Executive Summary and Business Description— This means you need to provide a clear concept of your business. It should describe your company, the industry, and “its competitive advantage.” Also include the specific need for your business, the amount of funds you require, the company history, plus its current operations and strategy.

Management Experience: Since your direct lender needs to know you have the qualified employees or management, always stipulate your staff’s experience and qualifications.

Financial Data: Present “the financial strength of your business.” This means you need to include financial statements, as well as business/industry forecasts for the next two to three years. This will be examined very closely to determine if your business can pay off the loan.

Marketing Plan: Including a proven market demand for your product or service, establishing who your competitors are (with their strengths and weaknesses), and presenting a client profile should be clearly documented.

Production plan: Be clear about your company’s capacity of managing and achieving projected sales.

Human Resources Management Staff: This will establish that your business can effectively recruit, develop and retain qualified employees to move your business or project forward to completion.

The BDC suggests that your business plan should always entail various financial documents for credibility. Market studies and research, documents supporting your financial data, client testimonials, and even media reports about your company are just a few of the documents to present.

As these are just a few of the starting points, visit www.bdc.ca for more details on creating an effective, well-organized and clear business plan to successfully achieve the short and long term goals for your business.