What banks want to see in your business plan is as reasonable a risk as possible. Fact of the matter is, unlike venture capital firms and stock market investors, banks are not inherently risk-oriented enterprises. Banks like guaranteed, steady returns earned mainly through sound investments and the application of fees to consumers. So, when you present your business plan to the bank, their primary consideration is "how can we protect ourselves against loss if this venture doesn't succeed?" And the answer is, but marking something as collateral. If you have hard assets, retirement accounts, property, or other high-value salable items in your possession, these things can act as collateral, making the bank look much more favorably on your application for a loan or line of credit. By the same token, having the loan backed by the Small Business Administration relives the lender of risk as well and makes it easier for entrepreneurs to obtain expansion or start-up capital. So these things all play in your favor, and you should know going in that your business plan isn't the sole document the bank will want to investigate.
But what do banks actually want to see in the plan itself? Basically, they want to see that you've taken the time to prepare an intelligent and complete business plan that shows how much funding you need, how you will apply it, and what the likely returns will be for your business within a three year time frame. (A 3-year set of financials, including revenue forecast, break-even, cash flows, and balance sheet, is usually sufficient for bank lending criteria.) The banker will also want to see that your business meets a market need, and that you've done your due diligence in assessing your market, how you will sell to them, and what competition you will face in the industry. These are the key points to cover in full. You can learn more online or at your local SCORE office. You can also contact MasterPlans at 877-453-2011. We have prepared thousands of bank-ready business plans and we have a high success rate with qualified clients. If you prefer, our expert financial modeling team, market analysts, and business writers can take the entire task of business plan development and review right off your plate.
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