How to Write a Business Plan for a Loan That Will Get Approved
Joy Wallet is advertiser-supported: we may earn compensation from the products and offers mentioned in this article. However, any expressed opinions are our own and aren't influenced by compensation. To read our full disclosure, click here.
A well-written business plan may be the deciding factor that your loan provider needs to approve you for a business loan. Knowing this, you may be wondering how to write a business plan for a loan so that you can secure it. Well, keep reading, and we will walk you through the entire process of choosing the format best for your business plan. Once you figure that out, we are going to go over the information that needs to be in it.
After that, it is on you to write and perfect your business plan so that when you need it to look for an investor who’ll give you a loan, you have it flawlessly written and ready to be presented.
In this article
Types of business plan formats
There are two main types of formats for your business plan. Here, we will go through their structure, detail, and intended use. The first is the traditional business plan format, and the second is the lean startup plan format. In this article, we will be focusing on the former.
Traditional business plan format
The traditional business plan format uses a standard structure and encourages you to go into as much detail as possible in each of the sections. These formats are best used when you are planning on asking for a business loan because of the amount of detail that goes into writing them.
So, let's first look at some common things about traditional format business plans before diving into more details.
- Length: 15–20 pages.
- Structure: sections like executive summary, market analysis and strategy, company description, organizational structure, services and products, financial projections, funding request, and appendices.
Now that you know what you need to have in your traditional business plan, let's get a detailed look into what every part of the structure needs to have and how it should be presented.
Fast and flexible financing for your business
Running a business takes everything you have. Getting fast and easy funding doesn't have to.
- Apply Online In Minutes
- Decision as fast as 24 hours
- Receive between $25k-$6m
Executive summary
In the executive summary, you should briefly describe your company. You should mention your products and/or services, your mission statement, and basic information about your leadership team, employees, and company location. It's also essential to include your financial situation and projections, as well as growth plans — especially if you seek funding. Basically, the executive summary is where you tell whoever is reading your business plan how and why your business will be a success.
Example:
ABC Catering Co. is a full-service catering company based in Denver, Colorado, specializing in farm-to-table cuisine for corporate events and weddings. With over 10 years of experience, our leadership team is dedicated to delivering a unique dining experience that supports local farmers and provides fresh, sustainable food. We have grown our team to 15 employees and expanded our services to include mobile kitchens. We are seeking $150,000 in funding to upgrade our equipment and expand into new markets, aiming for 15% revenue growth over the next two years.
Company description
Here, you will provide detailed information about your company. You will need to expand on the information you gave in the executive summary. Be very specific about who your company caters to and what problem you are solving with your products or services.
In this section, you will need to boast about your business. Talk about all the competitive advantages you may have.
Example:
ABC Catering Co. was founded to fill a gap in the local catering market, where fresh, sustainable ingredients were hard to come by. We offer personalized menus made with locally sourced ingredients, catering to eco-conscious clients who want to provide a high-quality experience for their guests. Our competitive edge lies in our partnerships with local farmers, ensuring exclusive access to the freshest seasonal produce. Our company serves corporate clients, event planners, and individuals seeking premium catering services for special occasions.
Market analysis
In the market analysis section of your business plan, you will need to show that you understand the market your company is in. You will need to look at what your competitors are doing. What are their strengths? Why does what they do work, and can you do it better?
Example:
The catering industry in Denver is projected to grow by 5% annually over the next five years, with a particular demand for sustainable and eco-friendly catering services. Our primary competitors include XYZ Catering and 123 Events, both of which offer a wide range of services but do not emphasize farm-to-table options. By focusing on fresh, locally sourced ingredients, we can differentiate ourselves and capture a growing market of environmentally conscious clients. We will also expand our online presence to target a younger, tech-savvy audience.
Organizational structure
This section needs to tell your loan provider exactly how your company is structured. Describe the legal aspects of your company — things like what kind of corporation your business is, whether it will have a general or limited partnership, or whether you are the sole proprietor. You can use an organizational chart to show who is in charge of what in your business. Showcase your employees and how they will make your business thrive.
Example:
ABC Catering Co. is registered as an LLC and operates with a flat organizational structure to encourage collaboration. Our CEO oversees operations, while the head chef manages kitchen staff. We employ a team of 10 full-time employees, including chefs, event coordinators, and marketing personnel. Additionally, we have 5 part-time employees who assist during peak seasons. The company is owned by Jane Doe (CEO) and John Smith (Head Chef), who each hold equal shares of the business.
Fast and flexible financing for your business
Running a business takes everything you have. Getting fast and easy funding doesn't have to.
- Apply Online In Minutes
- Decision as fast as 24 hours
- Receive between $25k-$6m
Services or products
What does your company offer? In this section, you'll have to describe your services and/or products in detail. How does everything work? What is it for? Explain it all. If you have copyrights or patents, include those, and if you are doing R&D, describe that too.
Example:
ABC Catering Co. offers a variety of catering services, including wedding catering, corporate event catering, and private dining experiences. Our menus are fully customizable, with a strong emphasis on local, seasonal ingredients. We offer gluten-free, vegan, and vegetarian options, and all our menus are designed by our head chef. In addition, we have patented a special delivery system that keeps food fresh and at the perfect temperature during transport.
Marketing strategy
There is no one way to market your business; you have to do what works for you and evolve your strategy when it doesn't anymore. In this part of your business plan, you will explain your marketing strategy and how you will use it to make your business successful.
Example:
We plan to increase our visibility through targeted digital marketing campaigns and partnerships with wedding and event venues. Our strategy includes maintaining an active social media presence, focusing on Instagram and Facebook ads to showcase our beautifully crafted dishes. We will also implement a referral program offering discounts to repeat customers and partner with local influencers to boost brand awareness. Lastly, we will use SEO to improve our website’s ranking and attract more organic traffic.
Funding request
If you are looking to write a business plan for a loan specifically, this section is uniquely important. You will have to explain your goals, outline exactly how you are going to use the funding to secure those goals, and give a timeframe for reaching them.
Make sure to specify what kind of loan you want. If you’re going to offer collateral to make it a secure loan, will you pick debt or equity? Also, provide the lender with detailed information on where and how their money will be used.
Example:
ABC Catering Co. is seeking $150,000 in funding to purchase new kitchen equipment, upgrade our delivery vehicles, and expand our marketing efforts. Of the total amount, $75,000 will be allocated for equipment, $50,000 for marketing, and $25,000 for vehicle upgrades. We expect to repay the loan within five years, using increased revenue from our expanded services to do so. We are requesting a five-year term loan with a 5% interest rate and offering our vehicles as collateral.
Fast and flexible financing for your business
Running a business takes everything you have. Getting fast and easy funding doesn't have to.
- Apply Online In Minutes
- Decision as fast as 24 hours
- Receive between $25k-$6m
Financial projections
We mentioned in the executive summary that you will need to talk about your financial projections. Here, you will have to provide a detailed explanation of that. The goal of this section is to supplement the financial request. Prove to your loan provider that your company can be a financial success, and they are more likely to provide you with the funds to make it so.
Include income statements, balance sheets, cash flow statements, and expenditure budgets if you have them. Use quarterly or even monthly projections for your first year, provide detailed descriptions of all your projections, and make sure you match them to your funding request.
Example:
In the first year, ABC Catering Co. projects revenues of $500,000, with a 20% increase in revenue in the second year due to our expanded services. Our gross profit margin is expected to remain at 40%, with a net income of $100,000 in the first year. We anticipate our marketing efforts will lead to a 10% increase in client inquiries, with a conversion rate of 25%. Our balance sheet shows total assets of $250,000, and we project steady cash flow, allowing us to meet loan repayment terms.
Appendices
This is optional, but if you choose to fill it, you must provide your lender with supporting documents or other requested materials, such as credit histories, resumes, letters of reference, product pictures, permits, licenses, etc.
Example:
Included in the appendices are the resumes of the executive team, letters of reference from satisfied clients, photos of past events, and copies of our catering licenses and permits. Additionally, we have attached our detailed expenditure budget and recent financial statements. These documents provide further insight into our experience and the financial health of our business.
Joy Wallet is an independent publisher and comparison service, not an investment advisor, financial advisor, loan broker, insurance producer, or insurance broker. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. They are not intended to provide investment advice. Joy Wallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. We encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Featured estimates are based on past market performance, and past performance is not a guarantee of future performance.
Our site doesn’t feature every company or financial product available on the market. We are compensated by our partners, which may influence which products we review and write about (and where those products appear on our site), but it in no way affects our recommendations or advice. Our editorials are grounded on independent research. Our partners cannot pay us to guarantee favorable reviews of their products or services.
We value your privacy. We work with trusted partners to provide relevant advertising based on information about your use of Joy Wallet’s and third-party websites and applications. This includes, but is not limited to, sharing information about your web browsing activities with Meta (Facebook) and Google. All of the web browsing information that is shared is anonymized. To learn more, click on our Privacy Policy link.
Images appearing across JoyWallet are courtesy of shutterstock.com.
Joy Wallet
We are entrepreneurs, investors, fintech enthusiasts, journalists, and masters of aggregating and deciphering data. We have been working in the financial services industry for over seven years and wanted to build a place where we can bring together the brightest minds and organizations to help you make more money.
With access to the right opportunities, you can take care of the ones you love and create a more prosperous lifestyle. We made Joy Wallet out of a desire to find the best financial partners, strategies and tools to help you achieve your life goals and make the most of money.
Share this article
