writing a business plan for a bank loan

How To Write a Business Plan for Bank Loan in 9 Steps: Checklist

By alex ryzhkov, resources on bank loan.

• Financial Model
• Business Plan
• Value Proposition
• One-Page Business Plan
• SWOT Analysis
• Business Model
• Marketing Plan

Are you an aspiring entrepreneur looking to secure a bank loan for your business venture? Well, you're not alone. The fee-based model for bank loans in the US has become the go-to solution for many borrowers. In fact, this business model has experienced significant growth over the years, making it a popular choice for funding. According to the latest statistics, the fee-based model accounts for XX% of all bank loans in the country. With its ability to provide financing options with flexible repayment schedules, it's no wonder that both banks and borrowers favor this model.

Now that you understand the importance and prevalence of the fee-based model, let's delve into how you can effectively write a business plan to obtain a bank loan. This comprehensive 9-step checklist will guide you through the process, ensuring that you cover all essential aspects. So, roll up your sleeves and let's get started!

• Conduct market research
• Identify target customers
• Analyze competition
• Determine the amount of funding required
• Gather necessary financial documents
• Outline the purpose and goals of the loan
• Create a company profile
• Develop a marketing and sales strategy
• Identify potential risks and mitigation strategies

Following these steps diligently will not only enhance your chances of securing a bank loan but also provide you with a solid foundation for your business. So, let's dive right into the first step - conducting market research!

Conduct Market Research

In order to write a comprehensive business plan that will appeal to a bank for a loan, it is crucial to conduct thorough market research. This step will provide you with valuable insights into the industry, target market, and competitive landscape. By understanding these key factors, you will be able to make informed decisions and create a strong case for the loan application.

Here are some important points to consider while conducting market research:

• Identify your target customers: Clearly define the specific group of customers who are most likely to benefit from your product or service. This will help you tailor your business plan to address their needs and preferences.
• Analyze the competition: Identify your main competitors and analyze their strengths, weaknesses, and market positioning. This will help you differentiate your business and showcase your unique value proposition.
• Understand market trends: Stay updated with the latest market trends, consumer behavior, and industry forecasts. This will help you identify potential opportunities and challenges that may impact your business.
• Evaluate market potential: Assess the size of your target market and determine the potential demand for your product or service. This will demonstrate to the bank that there is a viable market opportunity for your business.

Tips for conducting market research:

• Utilize online resources: Take advantage of online research tools and databases to gather industry reports, market data, and consumer insights.
• Conduct surveys or interviews: Engage with your target customers to gather firsthand feedback and insights about their needs and preferences.
• Join industry associations: Participate in trade associations and networking events to connect with industry professionals and gain valuable market insights.
• Stay updated with the competition: Regularly monitor your competitors' activities, such as their marketing strategies, product offerings, and pricing, to stay ahead of the game.

By conducting thorough market research, you will gain a comprehensive understanding of your target market, competition, and industry trends. This knowledge will enable you to develop a robust business plan that showcases the potential success and profitability of your business to the bank, increasing your chances of securing a loan.

Identify Target Customers

Identifying your target customers is a crucial step in developing a solid business plan for a bank loan. To ensure that your loan request is well-aligned with the needs and preferences of your customers, it is important to have a clear understanding of who they are.

The first step in identifying your target customers is conducting thorough market research. This involves gathering data and insights about the industry, market trends, and the needs and wants of potential customers. This information will help you narrow down your target audience and tailor your business plan to meet their specific needs.

Once you have gathered relevant market research data, you can start creating a profile of your ideal customer. Consider factors such as demographics, psychographics, and buying behavior. Demographics include characteristics such as age, gender, income level, and location. Psychographics, on the other hand, delve into your customers' interests, attitudes, and lifestyle choices.

Creating a customer profile will help you understand your target customers on a deeper level and enable you to develop targeted marketing strategies. This will increase the chances of your business being successful and appealing to both your customers and potential lenders.

Tips for Identifying Target Customers:

• Consider conducting surveys or interviews to gather direct feedback from potential customers.
• Utilize market segmentation techniques to identify specific customer groups that may have unique needs or preferences.
• Research your competitors and understand who their target customers are to gain insights.
• Monitor industry trends and patterns to identify emerging customer segments or target markets.

Analyze Competition

When seeking a bank loan, it is crucial to have a clear understanding of your competition in the market. Analyzing your competition will not only help you identify potential threats but also highlight areas where you can differentiate yourself and gain a competitive advantage.

Start by identifying direct competitors who offer similar products or services to yours. Research their market share, pricing strategies, distribution channels, and target customer demographics. This information will give you insights into their strengths and weaknesses.

Compare your products or services to those of your competitors and identify your unique selling points. What sets you apart from the competition? Do you have any patented technology, superior customer service, or innovative features that give you a competitive edge? Understanding these factors will help you position your business in a way that appeals to potential lenders.

Tips for Analyzing Competition:

• Subscribe to your competitors' newsletters and follow them on social media to stay updated on their latest offerings and marketing strategies.
• Visit their websites and evaluate their online presence. Look for customer reviews and testimonials to gauge customer satisfaction.
• Monitor industry publications and trade shows to gather information about new entrants, emerging trends, and market developments.
• Stay up-to-date with industry reports and market research to understand the overall competitive landscape.
• Consider conducting a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to assess your business in relation to your competitors.

By thoroughly analyzing your competition, you can demonstrate to the bank that you have a solid understanding of the market landscape and have strategically positioned your business to succeed.

Determine The Amount Of Funding Required

When applying for a bank loan, it is crucial to determine the exact amount of funding your business needs. This will help you create a clear and realistic financial plan that aligns with your goals and allows you to meet your financial obligations.

Here are a few steps to help you determine the funding required:

• Evaluate your business expenses: Start by analyzing your current and future expenses. This includes everything from rent, utilities, and salaries to inventory and marketing costs. Consider any upcoming investments or expansion plans that may require additional funding.
• Estimate revenue projections: Assess your business's revenue potential based on market research, customer demand, and past performance. Take into account any potential growth opportunities or challenges that may affect your financial projections.
• Factor in contingencies: It's always wise to include a contingency fund to account for unexpected expenses or changes in the market. This will provide a buffer and ensure that your business can withstand any unforeseen circumstances.
• Be specific and detailed in your estimations to provide a realistic picture of the funding required.
• Consult with financial professionals or advisors to get a better understanding of your business's financial needs.
• Consider getting quotes or estimates from vendors and suppliers to accurately calculate the funding required.
• Regularly review and update your financial plan to reflect any changes in your business's needs or circumstances.

By carefully determining the amount of funding required, you can present a comprehensive and well-prepared business plan to your bank, increasing your chances of securing the loan you need to fuel your business's growth and success.

Gather Necessary Financial Documents

Gathering the necessary financial documents is a crucial step in the process of writing a business plan for a bank loan. These documents provide the bank with a clear understanding of your financial situation and help them evaluate the feasibility and potential of your business. Here are the essential financial documents you will need to gather:

• Profit and Loss Statement (P&L): A P&L statement provides an overview of your company's revenues, costs, and expenses over a specific period. It helps the lender assess your profitability and sustainability.
• Balance Sheet: A balance sheet provides a snapshot of your company's financial position at a particular point in time. It lists your assets, liabilities, and equity and enables the lender to evaluate your financial stability and ability to repay the loan.
• Cash Flow Statement: A cash flow statement shows the inflow and outflow of cash in your business. It helps the lender understand how effectively your company manages its cash resources and assesses your ability to generate sufficient funds to repay the loan.
• Business Tax Returns: Including your business tax returns for the past few years demonstrates your company's financial history and compliance with tax regulations. It validates the accuracy of your financial statements and enhances the lender's confidence in your business.
• Personal Tax Returns: Personal tax returns may be required if you are a sole proprietor or a small business owner. This document assists the bank in evaluating your personal financial situation and any potential impact on your ability to repay the loan.
• Bank Statements: Providing bank statements helps the lender assess your company's cash flow, bank balances, and transaction history. It offers insight into your financial activities and can support the accuracy of your financial projections.
• Financial Projections: Creating realistic financial projections is essential to demonstrate your future revenue potential and repayment ability. Ensure that your financial projections align with industry standards and are supported by market research and analysis.
• Organize your financial documents in a well-structured manner to make it easier for the lender to review.
• Ensure the accuracy and consistency of your financial documents to build trust and credibility with the bank.
• Consult an accountant or financial advisor to ensure your financial documents are comprehensive and meet the requirements of the bank.
• Keep your financial documents up-to-date and maintain records of any significant changes or updates.
• Include any additional supporting documents that may strengthen your loan application, such as business licenses, contracts, or insurance policies.

Outline The Purpose And Goals Of The Loan

When applying for a bank loan, it is crucial to clearly outline the purpose and goals of the loan . This not only helps the bank understand your business needs but also increases your chances of securing the funding you require. Here are some important points to consider:

• Specify the exact amount of funding you need and how it will be utilized. This could include purchasing inventory, expanding operations, investing in technology, or hiring additional staff.
• Identify the specific goal or objective of the loan. Is it to increase market share, launch a new product or service, or improve efficiencies in your business operations?
• Provide a timeline for achieving the goals outlined. This will demonstrate to the bank that you have a clear plan in place and helps establish realistic expectations for loan repayment.
• Outline the anticipated impact of the loan on your business. Will it result in increased revenue, improved profitability, or enhanced customer satisfaction?
• Highlight any potential risks associated with the loan and explain how you plan to mitigate them. This shows the bank that you have carefully considered any potential challenges and have strategies in place to overcome them.
• Including specific details and numbers can help strengthen your loan application.
• Clearly articulate how the loan will contribute to the growth and success of your business.
• Be realistic in setting goals and timelines to ensure feasibility.
• Demonstrate your understanding of potential risks and show how you are prepared to handle them.

Create A Company Profile

When applying for a bank loan, creating a strong company profile is crucial. This profile provides the bank with an overview of your business, its history, and its future prospects. It gives lenders confidence in your ability to repay the loan and showcases your business as a viable investment opportunity. Here are some important elements to include in your company profile:

• Company Overview: Start by providing a concise summary of your business, including its name, location, and legal structure. Give a brief description of your products or services, target market, and competitive advantages.
• Management Team: Highlight the qualifications and experience of your key personnel, including their roles within the company. This will demonstrate that your team has the necessary expertise to drive the business forward and manage loan repayments effectively.
• Financial Performance: Include key financial information, such as your company's revenue, profit margins, and cash flow. Show the bank that your business is financially stable and capable of generating sufficient income to cover loan repayments.
• Growth Potential: Outline your plans for growth and expansion. Explain how the loan will contribute to achieving your goals and increasing profitability. Be sure to include market research and industry trends to support your growth projections.
• Collateral: If you have collateral available to secure the loan, provide details about the assets that can be used as security. This could be real estate, inventory, equipment, or accounts receivable. Highlight the value of these assets and how they mitigate the bank's risk.
• Keep the profile concise and focused, highlighting the most important aspects of your business.
• Use clear and concise language to make the profile easy to understand.
• Include any awards, accolades, or industry certifications that reflect positively on your business.
• Provide references or testimonials from satisfied customers or clients to further enhance your credibility.

A well-crafted company profile can greatly increase your chances of securing a bank loan. It shows the lender that you have a solid business foundation, a capable management team, and a clear vision for growth. Remember to tailor the profile to the specific requirements of the bank and emphasize the aspects that are most relevant to their lending criteria.

Develop A Marketing And Sales Strategy

Developing a strong marketing and sales strategy is crucial for the success of your business, especially when seeking a bank loan. It demonstrates to the lender that you have a comprehensive plan to attract customers, generate revenue, and ultimately repay the loan. Here are some important steps to consider:

1. Understand your target market: Before developing your marketing and sales strategy, it's important to have a deep understanding of your target customers. Conduct market research to identify their needs, preferences, and behaviors. This will help you tailor your marketing efforts and messaging to effectively reach and attract your ideal customers.

2. Define your unique selling proposition (USP): Differentiate your business from competitors by identifying and promoting your unique selling proposition. This is what sets your product or service apart and makes it attractive to customers. Clearly communicate your USP in all your marketing materials to grab attention and convince potential customers why they should choose your business.

3. Develop a marketing plan: Outline the specific marketing activities you will undertake to promote your business. This may include online advertising, social media marketing, content marketing, email campaigns, traditional advertising, and more. Set realistic goals and allocate a budget for each marketing channel. Ensure your marketing plan aligns with your target market and USP.

4. Create a sales strategy: Your sales strategy outlines how you will convert leads into paying customers. Determine your sales process, including lead generation, nurturing, and closing techniques. Train your sales team (if applicable) to effectively communicate your value proposition and overcome objections. Consider whether you will offer any promotions or discounts to attract initial customers.

5. Utilize online channels: In today's digital age, online marketing is essential for reaching a wide audience. Establish a professional website that showcases your products or services. Leverage social media platforms relevant to your target market to engage with potential customers and build brand awareness. Consider implementing search engine optimization (SEO) strategies to improve your online visibility.

• Focus on building strong relationships with your customers to encourage repeat business and referrals.
• Monitor and measure the effectiveness of your marketing and sales efforts using analytics tools. This will help you identify what's working and what needs improvement.
• Stay informed about industry trends and adapt your marketing and sales strategies accordingly. Consumer preferences and behaviors can change over time, so it's important to stay relevant.

By developing a comprehensive marketing and sales strategy, you demonstrate to lenders that you have considered how to attract and retain customers, increasing your chances of securing a business loan. Keep refining and adapting your strategy as your business evolves to ensure long-term success.

Identify Potential Risks and Mitigation Strategies

Identifying potential risks is a crucial step in writing a business plan for a bank loan. Banks want to ensure that they are lending to a business that has considered all potential risks and has strategies in place to mitigate them. Here are some key risks to consider:

• Market Risks: Analyze the market conditions and assess any potential risks that could impact your business. This could include changes in consumer preferences, economic downturns, or competitor actions. Mitigation strategies may include diversifying your customer base, maintaining a competitive pricing strategy, or adapting your products/services to meet changing market trends.
• Operational Risks: Consider the potential risks associated with your day-to-day operations. This could include supply chain disruptions, equipment failure, or employee turnover. Mitigation strategies may include maintaining backup suppliers, implementing preventive maintenance plans, or investing in employee training and retention programs.
• Financial Risks: Evaluate the financial risks that your business may face, such as cash flow fluctuations, increasing expenses, or inability to meet debt obligations. Mitigation strategies may include creating a robust financial forecasting system, building a contingency fund, or negotiating favorable payment terms with suppliers.
• Regulatory and Compliance Risks: Be aware of any regulations or legal requirements that impact your industry and business operations. Non-compliance can lead to penalties, legal issues, and reputational damage. Mitigation strategies may include hiring legal professionals to ensure compliance, regularly reviewing and updating policies and procedures, and staying informed about changes in regulations.
• Be thorough in identifying potential risks and assess their potential impact on your business.
• Include specific mitigation strategies that are relevant to your industry and business model.
• Provide evidence or examples of how you have successfully mitigated risks in the past.
• Regularly review and update your risk assessment to adapt to changing circumstances and market conditions.

By demonstrating that you have identified potential risks and have strategies in place to mitigate them, you will instill confidence in the bank and increase your chances of securing a loan.

In conclusion, writing a business plan for a bank loan is a crucial step towards securing the funding needed to start or expand a business. By following the nine steps checklist outlined in this blog post, entrepreneurs can effectively present their business ideas to lenders, showcasing their market research, financial projections, and risk mitigation strategies. This comprehensive approach demonstrates professionalism and preparedness, increasing the chances of obtaining the desired loan amount at favorable terms. It is essential to remember that each bank may have its specific requirements, so adapting the business plan to meet their criteria is also crucial. By carefully crafting a business plan, entrepreneurs can position themselves for success and achieve their goals with the support of a bank loan.

$169.00 $99.00 Get Template

Related Blogs

• Starting a Business
• KPI Metrics
• Running Expenses
• Startup Costs
• Pitch Deck Example
• Increasing Profitability
• Sales Strategy
• Rising Capital
• Valuing a Business
• How Much Makes
• Sell a Business
• Business Idea
• How To Avoid Mistakes

Leave a comment

Your email address will not be published. Required fields are marked *

Please note, comments must be approved before they are published

What stage is your business at?

Tell us and we’ll match you with a special LivePlan discount:

New Business Idea

Startup Phase

Established Business

Enter your email address to unlock it.

Please enter a valid email address

We care about your privacy. See our Privacy Policy .

How To Write A Business Plan for A Bank Loan (3 Key Steps)

Wondering how to create a business plan that will wow your banker.

You're not alone.

Most entrepreneurs see writing a business plan as a gargantuan task – especially if they've never written one before.

Where do you start?

How do you calculate the financials?

How can you be sure you're not making a mistake?

And if you need a business plan for a bank loan, getting this document right is absolutely essential.

So here's what we recommend: simplify the planning process by breaking the work up into manageable, bite–sized steps. That way, you can focus on one section at a time to make sure it's accurate.

Here's a quick overview of the step–by–step process we guide entrepreneurs through when they sign up for LivePlan.

Step 1: Outline The Opportunity

This is the core of your business plan. It should give loan officers a clear understanding of:

• What problem you're solving
• How your product or service fits into the current market
• What sets your business apart from the competition

There are three key parts to this step:

The Problem & Solution

Detail exactly what problem you are solving for your customers. How do their lives improve after you solve that “pain point” for them?

We recommend actually going out and chatting with your target audience first. That way, you can validate that you're solving a real problem for your potential customers.

Be sure to describe your solution in vivid detail. For example, if the problem is that parking downtown is expensive and hard to find, your solution might be a bike rental service with designated pickup and dropoff locations.

Target Market

Who exactly are you selling to? And roughly how many of them are there?

This is crucial information for determining whether or not your business will succeed long–term. Never assume that your target market is “everyone.”

For example, it would be easy for a barber shop to target everyone who needs a haircut. But most likely, it will need to focus on a specific market segment to reach its full business potential. This might include catering to children and families, seniors or business professionals.

Competition

Who are your direct competitors? These are companies that provide similar solutions that aim to solve your customers' pain points.

Then outline what your competitive advantages are. Why should your target market choose you over the other products or services available?

Think you don't have any competition? Think again. Your customers are likely turning to an indirect competitor that is solving their problem with a different type of solution.

For example: A taco stand might compete directly with another taco stand, but indirectly with a nearby hot dog vendor.

Boost your chances of securing a loan

See how LivePlan can help you write a fundable business plan

Step 2: Show how you'll execute

This is where the action happens! Here you'll get into the details of how you'll take advantage of the opportunity you outlined in the previous section. This part demonstrates to banks that you have a strong plan to achieve success.

The three main components of this step include:

Marketing & Sales Plan

There can be a lot of moving parts to this one, depending on your business model.

But most importantly, you'll need to fully explain how you plan to reach your target market and convert those people into customers. A few example of what should be included:

• Positioning strategy. What makes your business both unique and highly desirable to your target market?
• Marketing activities. Will you advertise with billboards, online ads or something else entirely?
• Pricing. What you charge must reflect consumer demand. There are a few models to choose from, including ‘cost–plus pricing’ and ‘value pricing.’

This is the nuts and bolts of your business. It's especially important for brick–and–mortar companies that operate a storefront or have a warehouse.

You may want to explain why your location is important or detail how much space you have available. Plan to work at home? You can also cover your office space and any plans to move outside your house.

Any specialized software or equipment and tools should also be covered here.

Milestones & Metrics

Lenders and investors want to be confident that you know how to turn your business plans into financial success. That's where your milestones come in.

These are planned goals that help you progress your company. For example, if you're launching a new product your milestones may include completing prototypes and figuring out manufacturing.

Metrics are how you will gauge the success of your business. Do you want to generate a certain level of sales? Or keep costs at a certain level? Figuring out which metrics are most important and then tracking them is essential for growth.

Step 3: Detail your financial plan

This is the most crucial – and intimidating – part of any business plan for a bank loan. Your prospective lender will look especially close at this section to determine how likely your business is to succeed.

But the financial section doesn't have to be overwhelming, especially if you break the work into smaller pieces. Here are 3 items that your plan must have:

Simply put, this is your projections for your business finances. It gives you (and the bank) an idea of how much profit your company stands to make. Just a few items you'll need to include:

• Revenue. List all your products, services and any other ways your business will generate income.
• Direct costs. Or in other words, what are the costs to make what you sell?
• Personnel. Salaries and expenses related to what you pay yourself, employees and any contactors.
• Expenses. Things like rent, utilities, marketing costs and any other regular expenses.

Exactly how will you use any investments, loans or other financing to grow your business? This might include paying for capital expenses like equipment or hiring personnel.

Also detail where all your financing is coming from. Lines of credit, loans or personal savings should be listed here.

Bankers will be giving this section a lot of attention. Here's what you'll need:

• Profit & Loss. This statement pulls in numbers from your sales forecast and other elements to show whether you're making or losing money.
• Projected Balance Sheet. This is likely the first thing a loan officer will look at: it covers your liability, capital and assets. It provides an overview of how financially sound your business is.
• Projected Cash Flow. Essentially, this statement keeps track of how much money you have in the bank at any given point. Loan officers are likely to expect realistic monthly cash flow for the next 12 months.

Don't forget the Executive Summary

The Executive Summary is the first section of your business plan, but we recommend you tackle it last.

It's basically an introduction to your company, summarizing the main points of your plan. Keep it to just one or two pages and be as clear and concise as possible.

Think of it as a quick read designed to get the lender excited about your business.

If you need help writing your plan

Not everyone feels confident writing a business plan themselves, especially if it's needed to secure a bank loan.

And although you don't need an MBA to write one, getting your business plan right often does require quite a bit of work. So if you need help writing your plan, here are two options to consider:

• Hire a professional business plan writer to do it for you. This is typically the most expensive route, but worth it if you're pursuing $100,000 or more in capital.
• Sign up for LivePlan. It's business planning software that walks you through a step–by–step process for writing any type of plan. It's an affordable option that also gives you an easy way to track your actuals against your business plan, so you can get the insights you need to grow faster.

LivePlan makes it easy to write a winning business plan

No risk – includes our 35-day money back guarantee.

• Search Search Please fill out this field.

Why Do I Need a Business Plan?

Sections of a business plan, the bottom line.

• Small Business

How to Write a Business Plan for a Loan

How to secure business financing

Matt Webber is an experienced personal finance writer, researcher, and editor. He has published widely on personal finance, marketing, and the impact of technology on contemporary arts and culture.

A business plan is a document that explains what a company’s objectives are and how it will achieve them. It contains a road map for the company from a marketing, financial, and operational standpoint. Some business plans are more detailed than others, but they are used by all types of businesses, from large, established companies to small startups.

If you are applying for a business loan , your lender may want to see your business plan. Your plan can prove that you understand your market and your business model and that you are realistic about your goals. Even if you don’t need a business plan to apply for a loan, writing one can improve your chances of securing finance.

Key Takeaways

• Many lenders will require you to write a business plan to support your loan application.
• Though every business plan is different, there are a number of sections that appear in every business plan.
• A good business plan will define your company’s strategic priorities for the coming years and explain how you will try to achieve growth.
• Lenders will assess your plan against the “five Cs”: character, capacity, capital, conditions, and collateral.

There are many reasons why all businesses should have a business plan . A business plan can improve the way that your company operates, but a well-written plan is also invaluable for attracting investment.

On an operational level, a well-written business plan has several advantages. A good plan will explain how a company is going to develop over time and will lay out the risks and contingencies that it may encounter along the way.

A business plan can act as a valuable strategic guide, reminding executives of their long-term goals amid the chaos of day-to-day business. It also allows businesses to measure their own success—without a plan, it can be difficult to determine whether a business is moving in the right direction.

A business plan is also valuable when it comes to dealing with external organizations. Indeed, banks and venture capital firms often require a viable business plan before considering whether they’ll provide capital to new businesses.

Even if a business is well-established, lenders may want to see a solid business plan before providing financing. Lenders want to reduce their risk, so they want to see that a business has a serious and realistic plan in place to generate income and repay the loan.

Every business is different, and so is every business plan. Nevertheless, most business plans contain a number of generic sections. Common sections are: executive summary, company overview, products and services, market analysis, marketing and sales plan, operational plan, and management team. If you are applying for a loan, you should also include a funding request and financial statements.

Let’s look at each section in more detail.

Executive Summary

The executive summary is a summary of the information in the rest of your business plan, but it’s also where you can create interest in your business.

You should include basic information about your business, including what you do, where you are based, your products, and how long you’ve been in business. You can also mention what inspired you to start your business, your key successes so far, and your growth plans.

Company Overview

In this section, focus on the core strengths of your business, the problem you want to solve, and how you plan to address it.

Here, you should also mention any key advantages that your business has over your competitors, whether this is operating in a new market or a unique approach to an existing one. You should also include key statistics in this section, such as your annual turnover and number of employees.

Products and Services

In this section, provide some details of what you sell. A lender doesn’t need to know all the technical details of your products but will want to see that they are desirable.

You can also include information on how you make your products, or how you provide your services. This information will be useful to a lender if you are looking for financing to grow your business.

Market Analysis

A market analysis is a core section of your business plan. Here, you need to demonstrate that you understand the market you are operating in, and how you are different from your competitors. If you can find statistics on your market, and particularly on how it is projected to grow over the next few years, put them in this section.

Marketing and Sales Plan

Your marketing and sales plan gives details on what kind of new customers you are looking to attract, and how you are going to connect with them. This section should contain your sales goals and link these to marketing or advertising that you are planning.

If you are looking to expand into a new market, or to reach customers that you haven’t before, you should explain the risks and opportunities of doing so.

Operational Plan

This section explains the basic requirements of running your business on a day-to-day basis. Your exact requirements will vary depending on the type of business you run, but be as specific as possible.

If you need to rent office space, for example, you should include the cost in your operational plan. You should also include the cost of staff, equipment, and any raw materials required to run your business.

Management Team

The management team section is one of the most important sections in your business plan if you are applying for a loan. Your lender will want reassurance that you have a skilled, experienced, competent, and reliable senior management team in place.

Even if you have a small team, you should explain what makes each person qualified for their position. If you have a large team, you should include an organizational chart to explain how your team is structured.

Funding Request

If you are applying for a loan, you should add a funding request. This is where you explain how much money you are looking to borrow, and explain in detail how you are going to use it.

The most important part of the funding-request section is to explain how the loan you are asking for would improve the profitability of your business, and therefore allow you to repay your loan.

Financial Statements

Most lenders will also ask you to provide evidence of your business finances as part of your application. Graphs and charts are often a useful addition to this section, because they allow your lender to understand your finances at a glance.

The overall goal of providing financial statements is to show that your business is profitable and stable. Include three to five years of income statements, cash flow statements, and balance sheets. It can also be useful to provide further analysis, as well as projections of how your business will grow in the coming years.

What Do Lenders Look for in a Business Plan?

Lenders want to see that your business is stable, that you understand the market you are operating in, and that you have realistic plans for growth.

Your lender will base their decision on what are known as the “five Cs.” These are:

• Character : You can stress your good character in your executive summary, company overview, and your management team section.
• Capacity : This is, essentially, your ability to repay the loan. Your lender will look at your growth plans, your funding request, and your financial statements in order to assess this.
• Capital : This is the amount of money you already have in your business. The larger and more established your business is, the more likely you are to be approved for finance, so highlight your capital throughout your business plan.
• Conditions : Conditions refer to market conditions. In your market analysis, you should be able to prove that your business is well-positioned in relation to your target market and competitors.
• Collateral : Depending on your loan, you may be asked to provide collateral , so you should provide information on the assets you own in your operational plan.

How Long Does It Take to Write a Business Plan?

The length of time it takes to write a business plan depends on your business, but you should take your time to ensure it is thorough and correct. A business plan has advantages beyond applying for a loan, providing a strategic focus for your business.

What Should You Avoid When Writing a Business Plan?

The most common mistake that business owners make when writing a business plan is to be unrealistic about their growth potential. Your lender is likely to spot overly optimistic growth projections, so try to keep it reasonable.

Should I Hire Someone to Write a Business Plan for My Business?

You can hire someone to write a business plan for your business, but it can often be better to write it yourself. You are likely to understand your business better than an external consultant.

Writing a business plan can benefit your business, whether you are applying for a loan or not. A good business plan can help you develop strategic priorities and stick to them. It describes how you are going to grow your business, which can be valuable to lenders, who will want to see that you are able to repay a loan that you are applying for.

U.S. Small Business Administration. “ Write Your Business Plan .”

U.S. Small Business Administration. “ Market Research and Competitive Analysis .”

U.S. Small Business Administration. “ Fund Your Business .”

Navy Federal Credit Union. “ The 5 Cs of Credit .”

• How to Start a Business: A Comprehensive Guide and Essential Steps 1 of 25
• How to Do Market Research, Types, and Example 2 of 25
• Marketing Strategy: What It Is, How It Works, and How to Create One 3 of 25
• Marketing in Business: Strategies and Types Explained 4 of 25
• What Is a Marketing Plan? Types and How to Write One 5 of 25
• Business Development: Definition, Strategies, Steps & Skills 6 of 25
• Business Plan: What It Is, What's Included, and How to Write One 7 of 25
• Small Business Development Center (SBDC): Meaning, Types, Impact 8 of 25
• How to Write a Business Plan for a Loan 9 of 25
• Business Startup Costs: It’s in the Details 10 of 25
• Startup Capital Definition, Types, and Risks 11 of 25
• Bootstrapping Definition, Strategies, and Pros/Cons 12 of 25
• Crowdfunding: What It Is, How It Works, and Popular Websites 13 of 25
• Starting a Business with No Money: How to Begin 14 of 25
• A Comprehensive Guide to Establishing Business Credit 15 of 25
• Equity Financing: What It Is, How It Works, Pros and Cons 16 of 25
• Best Startup Business Loans 17 of 25
• Sole Proprietorship: What It Is, Pros and Cons, and Differences From an LLC 18 of 25
• Partnership: Definition, How It Works, Taxation, and Types 19 of 25
• What Is an LLC? Limited Liability Company Structure and Benefits Defined 20 of 25
• Corporation: What It Is and How to Form One 21 of 25
• Starting a Small Business: Your Complete How-to Guide 22 of 25
• Starting an Online Business: A Step-by-Step Guide 23 of 25
• How to Start Your Own Bookkeeping Business: Essential Tips 24 of 25
• How to Start a Successful Dropshipping Business: A Comprehensive Guide 25 of 25

• Terms of Service
• Editorial Policy
• Privacy Policy
• Your Privacy Choices

• Mar 30, 2023

The Ultimate Guide to Writing a Business Plan for a Loan: A Step-by-Step Walk-Through

The Ultimate Guide to Writing a Business Plan for a Loan: A Step-by-Step Walkthrough

As a business plan specialist and expert business planner, I'm here to guide you through the process of writing a comprehensive business plan for securing a loan. Whether you're a start-up or an established business looking to expand, a well-crafted business plan is essential for impressing potential lenders and securing the funding you need.

In this extensive, 5,000-word article, I'll cover everything you need to know about creating a top-notch business plan that will boost your chances of loan approval. We'll go through each section in detail, providing you with practical examples and tips to optimize your plan for success. So, let's get started!

Executive Summary

The executive summary is the first and most critical section of your business plan. It's a brief overview of your entire plan, highlighting the key points and giving readers an insight into your business.

Key elements to include in your executive summary:

Business concept: Briefly explain your business idea, the products or services you plan to offer, and the target market.

Company overview: Provide essential information about your company, including its legal structure, location, and mission statement.

Management team: Showcase the expertise and experience of your management team, emphasizing their ability to lead the business.

Market opportunity: Describe the market demand, trends, and target audience, highlighting the opportunity for your business to succeed.

Financial highlights: Summarize your financial projections, including sales, profits, and cash flow.

Loan purpose: Clearly state the purpose of the loan and the amount you're seeking.

Remember, the executive summary is often the first thing lenders read, so make it engaging and informative to grab their attention.

Company Description

The company description section is where you provide a more in-depth look at your business. It should give readers a clear understanding of your company's purpose, goals, and competitive advantages.

Key elements to include in your company description:

Business history: If your company has an existing history, briefly describe its origins and milestones achieved.

Mission statement: Articulate the purpose of your company and the value you aim to provide to customers.

Objectives: Outline the specific goals you want to achieve with your business, both short-term and long-term.

Products and services: Provide a detailed description of the products or services you plan to offer, emphasizing the benefits they provide to customers.

Target market: Identify your target audience, specifying their demographics, psychographics, and buying habits.

Competitive advantage: Explain what sets your business apart from the competition and how you plan to maintain this edge.

Market Analysis

The market analysis section demonstrates your understanding of the industry, market, and competition. It's crucial to show lenders that you've done your homework and have a comprehensive understanding of the market landscape.

Key elements to include in your market analysis:

Industry overview: Provide a high-level view of your industry, including its size, growth trends, and key players.

Market segmentation: Break down your target market into smaller segments, identifying their unique needs and preferences.

Target market characteristics: Describe the specific characteristics of your target market, such as demographics, psychographics, and geographic location.

Market demand: Present evidence of market demand, using data on customer needs, market trends, and buying behaviors.

Competitor analysis: Evaluate your main competitors, analyzing their strengths, weaknesses, and market share.

SWOT analysis: Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to assess your business's position in the market.

Marketing and Sales Strategy

In this section, outline your marketing and sales strategy to show lenders how you plan to attract and retain customers, as well as generate revenue. A well-defined marketing and sales strategy is crucial to demonstrate that you have a clear plan for growth and profitability.

Key elements to include in your marketing and sales strategy:

Marketing objectives: Define your marketing goals, such as brand awareness, lead generation, or customer retention.

Target audience: Reiterate your target market, emphasizing their needs and preferences.

Unique selling proposition (USP): Highlight your USP, the main reason customers should choose your products or services over the competition.

Marketing channels: Identify the marketing channels you plan to use, such as social media, email, content marketing, or paid advertising. Explain the rationale behind your choice of channels and how they align with your target audience.

Sales process: Describe your sales process, from lead generation to closing deals. Include details on your sales team structure, training, and compensation plans.

Key performance indicators (KPIs): List the KPIs you'll use to measure the success of your marketing and sales efforts, such as conversion rates, average deal size, or customer lifetime value.

Operations Plan

The operations plan section details the day-to-day activities required to run your business. It shows lenders that you have a clear understanding of the operational aspects of your company and the resources needed to support your growth.

Key elements to include in your operations plan:

Facilities: Describe your business's physical location, including its size, layout, and any equipment or machinery required.

Production process: If applicable, detail your production process, including the steps involved, quality control measures, and production capacity.

Supply chain: Outline your supply chain, identifying key suppliers, procurement processes, and inventory management practices.

Staffing: Explain your staffing requirements, including the roles, responsibilities, and qualifications of each team member.

Management structure: Provide an organizational chart, showcasing your company's management structure and reporting lines.

Legal and regulatory requirements: Identify any relevant legal or regulatory requirements, such as licenses, permits, or certifications needed to operate your business.

Financial Plan

The financial plan is arguably the most crucial section of your business plan when applying for a loan. It demonstrates your ability to manage finances, make informed decisions, and, ultimately, repay the loan.

Key elements to include in your financial plan:

Revenue projections: Estimate your future sales, breaking them down by product or service category and showing growth rates over time.

Expense projections: Forecast your expenses, including fixed costs (e.g., rent, utilities) and variable costs (e.g., marketing, salaries).

Cash flow statement: Provide a detailed cash flow statement, showing how cash will flow in and out of your business over a specified period (typically 12 months).

Profit and loss statement: Create a profit and loss statement that projects your business's profitability over time.

Balance sheet: Prepare a balance sheet that showcases your business's assets, liabilities, and equity.

Break-even analysis: Calculate the point at which your business will break even, meaning your revenues equal your expenses.

Loan repayment schedule: Detail your proposed loan repayment schedule, including the loan amount, interest rate, repayment terms, and projected date of full repayment.

The appendices section is where you can include any additional documents or supporting materials that are relevant to your business plan. These documents may provide further evidence of your company's viability and help strengthen your case for securing a loan.

Examples of items to include in the appendices:

Resumes of key team members

Product samples or prototypes

Market research data or surveys

Letters of intent or contracts with suppliers, partners, or customers

Intellectual property documentation, such as patents, trademarks, or copyrights

Relevant licenses, permits, or certifications

Writing a comprehensive business plan for a loan can seem like a daunting task, but with the right approach and guidance, it's an achievable goal. By following the step-by-step instructions outlined in this article, you can create a well-structured, persuasive business plan that will greatly improve your chances of securing the funding you need. Remember to:

Pay close attention to your executive summary, as it sets the tone for the entire plan.

Be thorough and detailed in your market analysis, showing a deep understanding of your industry and target audience.

Develop a solid marketing and sales strategy to demonstrate your ability to attract and retain customers.

Address the operational aspects of your business, including staffing, facilities, and supply chain management.

Present a robust financial plan, complete with projections and a loan repayment schedule.

By doing so, you'll showcase your expertise, commitment, and preparedness to potential lenders, significantly increasing the likelihood of obtaining the loan your business needs to grow and succeed.

In addition to following the steps outlined in this guide, consider seeking professional assistance from a business plan consultant or specialist to review and refine your plan. Their expertise can help you identify any areas that may need improvement and ensure that your business plan is optimized for success.

Finally, remember to continuously update your business plan as your business evolves. Regular updates will ensure that your plan remains relevant and accurate, providing you with a valuable roadmap for your business's future growth and development.

With dedication, persistence, and a well-crafted business plan, you can secure the funding you need to bring your business vision to life. Good luck, and here's to your success!

• Writing Your Business Plan
• Funding Your Business

Recent Posts

The Five Most Frequently Asked Questions About Business Loans

The Five Most Frequently Asked Questions About Startup Funding

The Ultimate Cheat Sheet: Business Plan Writing Tips & Tricks

Comentários

Upmetrics AI Assistant: Simplifying Business Planning through AI-Powered Insights. Learn How

• 400+ Sample Business Plans
• WHY UPMETRICS?

Customers Success Stories

Business Plan Course

Strategic Canvas Templates

E-books, Guides & More

Business consultants

Entrepreneurs and Small Business

Accelerators and Incubators

Educators & Business Schools

Students & Scholars

AI Business Plan Generator

Financial Forecasting

AI Assistance

Ai Pitch Deck Generator

Stratrgic Planning

See How Upmetrics Works  →

• Sample Plans

Small Business Tools

How to Write a Professional Business Plan for a Loan

• March 27, 2024

11 Min Read

So, are you thinking of getting a loan or funding to start an exciting business journey?

That’s great! But before you go any further, it’s very important to have a solid business plan in place.

Well, we understand that creating a successful plan for a loan can be a daunting task. That’s why we’re here to help you!

This investment-ready business plan template for loans will help you include all the essential elements in your plan, from summarizing your business concept to projecting the financial data. It not only impresses business loan lenders but also sets the stage for success.

Ready to get started? Let’s first understand how business plans will help you with loan proposals.

How business plans help in loan applications?

A business plan is a professional document that serves as a written loan proposal if you want to secure a loan for capital investment. It details every aspect of your business, including its concept, goals, market opportunity, and financial data.

Whether you’re a new entrepreneur or a small business owner, you’ll need a well-prepared business plan. It helps you persuade potential investors or lenders of its viability and potential for success.

Here are a few primary reasons why business plans are necessary in loan applications:

It helps you showcase your vision

A well-written business plan communicates your business vision effectively and allows you to demonstrate your clarity of purpose and strategic direction. It offers lenders a compelling narrative of what your business is aimed for and how it will achieve its goals.

It helps you prove your financial feasibility

Well, lenders need assurance that they’re making a wise investment. A detailed business plan presents them with realistic financial projections, along with how your business will earn money and repay the loan. This infuses confidence in lenders and convinces them that your business is a safe bet.

It helps you mitigate potential risks

Once you start your business, it naturally involves fair enough risks. However, a good business plan clarifies that you’re aware of those challenges and have backup plans or strategies to mitigate them. This shows lenders that you’ve considered different situations and keep contingency plans in place.

It helps you demonstrate your preparedness

A business plan shows lenders that you’ve carefully outlined every aspect of your business—from conducting market analysis to predicting finances. It assures that you’re serious about your business and well-prepared to manage the ups and downs of starting a business.

In short, having a solid business plan can be the cornerstone of a successful loan application that explains your business idea and how you plan to utilize the loan money to get started.

Now that you know how business plans help in a loan application, it’s time to check out and understand the key elements of a business plan for a loan template.

Say goodbye to boring templates

Build your business plan faster and easier with AI assistant

Plans starting from $7/month

Key components of a successful business plan for a loan

1. executive summary.

An executive summary is the first section of the plan, providing a concise overview of the entire business plan.

Generally, it is written in the last, as it summarizes the most important components you mentioned in your plan.

Since the potential investors or lenders would read this section first, make sure that you keep it simple, crisp, and compelling to build their confidence in your business. Also, it should not be more than 1 or 2 pages.

You may write your executive summary with a precise explanation of your business concept, the type of business you operate, and its status.

Here are a few primary elements you must add to your summary:

• Your company’s mission statement
• The product or service you intend to offer
• Market Opportunity
• Management team’s background and experience
• Growth plans or long-term objectives
• Financial projections and funding needs

2. Company Overview

As you’ll give a brief introduction in the executive summary, this chapter will expand on it, providing an in-depth understanding of your business.

Company description includes all the business-related facts, such as the startup concept, vision-mission statements, company location, etc. Also, it explains the problems or challenges you aim to solve.

In addition to that, consider answering a few questions that would help lenders to grasp the significance of your business:

• What is the legal structure of your business?
• Who is the business owner?
• Do you have any business partners?
• Why did you start this business, and when it was founded?
• What are your business accomplishments to date?
• Who will get benefits from your company’s product or service?

Note that the company overview section can be regarded as your extended elevator pitch.

So, it’s a good opportunity to present your business’s specific details and structural aspects that the financing partner needs to know.

3. Market Analysis

The market analysis section provides readers with a deep understanding of the specific industry or market in which you plan to serve.

This seems unnecessary but serves different purposes. Those who are looking to fund a franchise business should do some serious work for this section, as lenders will review it very closely.

To carefully draft this section, you should conduct thorough market research and industry analysis to define your target customers, industry trends, market demand, and competitors.

This will demonstrate that you understand the market dynamics and validate the demand for your products or services.

Here are a few elements you should include in your market analysis section:

• Ideal target market
• Market size and growth potential
• Customer segments
• Competitive analysis
• Emerging trends
• Applicable government regulations

4. Product or Service Offerings

In this section, you may provide a detailed description of your products and service offerings, along with their features, benefits, and pricing structure.

It helps you highlight what your business offers to its ideal customers, how your offerings will satisfy their needs and explains the value proposition of your products or services.

You may consider including these points in the product or service section:

• A brief description of your product & service
• Pricing details
• Intellectual property, copyright, and patent filings
• Quality measures
• Any additional offerings

5. Sales and Marketing Strategies

Your marketing and sales plan elucidates how you intend to market your products or services in greater detail. It helps you outline the marketing and sales strategies you’ll use to attract and retain potential customers.

The primary goal is to give a flexible and practical marketing and sales strategy that persuades the lenders you know how to advertise or develop a public relations campaign to reach the company’s revenue goals.

For a well-crafted marketing plan, you might consider adding the following details in your plan:

• Your target audience and brand positioning
• Detailed marketing strategy
• Sales and marketing goals and KPIs
• Sales and marketing budgets
• Customer retention plan

While reviewing your loan application, lenders would like to know how you plan to make money and how you overcome marketing and sales challenges, so ensure that this strategy is always relevant.

6. Operations Plan

The operations plan section provides a clear picture of your company’s day-to-day operations and activities. It is a detailed-oriented section that outlines how you’ll manage to run your business smoothly.

Also, operational excellence is necessary to achieve your goals, satisfy client commitments, and maximize results. So, try to mention your operational intricacies and showcase efficient systems and processes.

Here are a list of details you must include in your operations plan:

• Staffing & training
• Operational processes
• Inventory needs and supplies
• facilities & technology
• Regulatory compliance

By offering insights into these operational aspects, this section helps you instill confidence in lenders about your ability to effectively handle and grow your company.

7. Management Team

Your management team section introduces the key individuals who are responsible for driving your business ahead.

It helps lenders easily understand your team’s roles & responsibilities, educational qualifications, industry experience, and how you plan to compensate your leadership team.

Even this will assure lenders that your team is capable enough to navigate challenges, make informed decisions, and reach strategic objectives. Also, they feel confident giving you a loan—even if it’s your startup.

So, you may consider including the below information:

• Company owner profile
• Resume-styled summary of key executives
• Organizational chart
• Compensation plan
• Details of advisory board members(if any)

8. Financial Plan

A well-written and comprehensive financial plan is one of the most crucial sections of your plan, as it helps you prove to lenders your business’s financial health, growth potential, and ability to repay the business loan.

So, your financial analysis must include the projected financial statements for three years or more. The following are the key financial projections that you should add:

• Income statements
• Cash flow statements
• Capital expenditure budgets
• Balance sheet
• Break-even analysis
• Funding requirements

As well as you should also list hard or soft collateral if you possess it so that you can put it up to get a loan. Even lenders may request to add more granular data(such as cost of sales or cost per product/service).

Note that if you’re a startup and don’t carry enough data to highlight, consider including estimated costs, revenue streams, and other strategic future projections you may have.

9. Appendix

The appendix is the last section of a professional business plan that typically provides supplementary information and other supporting documents the lender may need for better understanding.

You may include the following details in an appendix:

• Business licenses and permits
• Contractual agreements or other legal documents
• Letters of reference
• Credit histories and tax returns
• Key managers’ resumes and certificates
• Product photos

By adding these details, you offer more detailed explanations or validation for your business plan, strengthening your discussions and claims.

What factors do lenders look for in a business plan

When you submit a business plan to secure funding, lenders will analyze it to evaluate the viability and creditworthiness of your loan application. Here are several key factors they look for:

Character of your management team

Lenders will assess a business’ character that includes subjective or intangible qualities like whether its owners or key executives are perceived as honest, competent, or committed. Also, they consider educational background, industry experience, skills, leadership capabilities, and credit histories. This can be critical for evaluating prospects as most lenders don’t wish to lend to whom they don’t feel trustworthy.

Your capability to repay loans

Loan officers also spend a lot of time analyzing the borrower’s ability to repay the loan. They will thoroughly examine the financial statements such as projected revenue, expenses, cash flows, growth plans, and loan payments. Further, lenders analyze the financial history to see how much revenue you have generated or how much profit you have made in the past.

The capital amount you’re seeking

While reviewing loan applications, lenders will go through your financial information that highlights how much funding you’re seeking, how much cash you carry on hand, and how much debt you have. Also, they assess your personal financial investments as a sign of commitment and seriousness. So, make sure your business plan clearly outlines your investment amount and funding needs.

Collateral or personal guarantees

In some cases, lenders may request collateral or personal guarantees to secure the loan. Thus, you should document any assets or valuable items you can offer as collateral or additional security. Even lenders may still approve your loan without collateral if you have a good credit history and a reliable business plan.

By understanding these key considerations, you can prepare a business plan that resonates with the lender’s interests and concerns. Now, let’s move to a few business plan examples for a loan.

Business plan examples for a loan

When you’re just venturing into your entrepreneurship journey, crafting a comprehensive business plan for a loan application can be overwhelming.

So, try to consider some sample business plan templates or resources to get started on the first draft of your plan. Here are a few business plan examples that you may find helpful:

• Sample business plan outline
• Small business plan template
• Comprehensive business plan writing
• Business Plan Workbook for Loan Applications

Start preparing your business plan

Finally, you understand the importance and key elements of drafting a business plan for securing a loan or funding. But it requires some extra effort to find success down the road.

If you’re still confused about where to start, Upmetrics could be a great choice. It’s a modern business plan app that helps entrepreneurs or small business owners create an actionable plan quickly.

With Upmetrics, you’ll get easy-to-follow guides, a library of business plan templates , AI support, a financial forecasting tool, and other valuable resources to streamline your entire business planning approach.

So, don’t wait and start preparing your business plan for a loan!

Build your Business Plan Faster

with step-by-step Guidance & AI Assistance.

Frequently Asked Questions

Do i need a business plan to get a loan.

Of course, most lenders or financial institutes require a solid business plan, even if you are a well-established business. A well-crafted business plan helps you highlight every essential information about your business and demonstrate to lenders that you have a realistic plan in place to generate income and repay the loan.

Can I write a business plan myself?

Definitely, you can write a business plan by yourself. Also, you can get help from various resources available, including business plan templates and guides, to create a comprehensive plan. But, if you’re unsure or need assistance, you may consider having a business plan software or hiring a professional writer.

How long should my business plan be?

The length of your business plan should be concise and focused, typically depending on its purpose. A one-page business plan is a single-page document, a lean or mini business plan comprises 1–10 pages, while a comprehensive business plan can range from 15 to 35 pages and beyond.

What's the most important element of a loan-seeking business plan?

The financial plan is the most crucial element of a loan-seeking business plan, as lenders want to check realistic and well-structured financial forecasts that present your ability to repay the loan. Also, this section can make or break a lender’s confidence and willingness to raise capital.

What format should I use?

It’s essential to select a format that can effectively convey your business idea, strategy, and financial projections to the lenders. Following are a few common options to consider:

• Traditional text-based document
• PowerPoint or Keynote presentation deck
• Executive summary or a pitch deck

So, whatever format you choose, it should align with your preferences, the lender requirements, and the complexity of your business.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

Reach Your Goals with Accurate Planning

No Risk – Cancel at Any Time – 15 Day Money Back Guarantee

Popular Templates

How to write a business plan for a loan from a bank.

Learn how to increase your chances of securing a bank loan with these business proposal tips.

If you want a bank loan to start a new business or expand your existing one, you’ll need a thorough business proposal (also known as a loan proposal). It shows the bank (or lender) that you’ve got a plan that’s likely to succeed.

But loan proposals can also be tedious and complicated to draft. Use the following tips to learn how to write a business proposal for a bank loan and get a head start on success.

Why writing a business proposal for a bank loan is necessary.

When you’re considering getting a loan from a bank to support your business , one important step is creating a well-thought-out business proposal. This will not only help you explain your business plans but also play a big role in helping the bank decide whether to approve your loan request. Here are the main reasons why putting together a solid business proposal for a bank loan is so important:

• Clarity. A well-crafted business proposal helps you clearly articulate your business idea, goals, and objectives to the bank. This ensures that both you and the bank are on the same page regarding the purpose of the loan.
• Risk assessment. Banks need to assess the risk associated with lending you money. Your business proposal provides them with vital information about your business model, market analysis, and strategies, enabling them to gauge the level of risk involved.
• Repayment plan. Banks want to know how you plan to repay the loan. Your proposal should outline a clear and realistic repayment strategy, including cash flow projections and a timeline for repayment.
• Financial health. Lenders need to determine if your business is financially viable and can generate enough income to cover loan repayments. Your proposal should demonstrate the financial health of your business through financial statements, revenue projections, and profit margins.
• Legal requirements. Banks need to ensure that your business complies with all relevant laws and regulations. Your bank proposal letter for a business loan should address any legal considerations, licenses, permits, or certifications required.

What does a business plan proposal for a bank loan look like?

A business plan proposal for a bank loan is typically 20 to 30 pages long and follows a structured format:

• Cover sheet. A cover sheet is often included at the beginning of the proposal. It typically contains the business name, logo (if applicable), contact information, and the date of submission.
• Executive summary. This section provides a concise overview of the entire business proposal, summarizing key points such as the purpose of the loan, business description, financial projections, and the requested loan amount. It’s usually limited to one to two pages.
• Business description. This section offers a detailed explanation of the business, its history, mission, and vision. It also outlines the industry it operates in, its target market, and its competitive analysis.
• Market analysis. Includes market research findings, including market size, trends, and customer demographics. It should also detail your marketing and sales strategies.
• Management team. Describes the qualifications and experience of key members of your management team. Include their roles and responsibilities.
• Financial projections. Includes financial statements such as income statements, balance sheets, and cash flow projections. It should also outline how the loan will be used and how it will benefit the business.
• Loan request. Specifies the loan amount you are requesting from the bank, along with the purpose of the loan.
• Collateral and guarantees. If the loan requires collateral or personal guarantees, provide details about the assets or individuals involved.
• Repayment plan. Explains your proposed loan repayment strategy, including the terms, interest rate, and repayment schedule.
• Appendices. This section may include supporting documents, such as resumes of key team members, market research data, legal documents, and any other relevant information.

How to write a business proposal for a bank loan.

When it comes to securing a bank loan for your business, the quality of your business proposal can make all the difference. Let’s go through the process of how to write a business proposal for a bank loan.

Include critical details for the business plan in the proposal.

Your bank proposal should begin by introducing your business comprehensively. Cover essential aspects such as:

• Business overview. Introduce your business with its name, legal structure, and establishment date.
• Mission. Articulate your business’s purpose and long-term goals.
• Market analysis. Provide insights into your industry, target market, and current trends.
• Company history. Share key milestones and noteworthy achievements.
• Contact information. Include up-to-date contact details.
• Leadership team. Highlight key team members, their roles, qualifications, and relevant experience.
• Legal structure. Specify your business’s legal structure and ownership.
• Products/services. Describe your business offerings and emphasize their unique features.

Outline how you’ll pay the business loan back.

Every bank loan proposal should include some standard details like how much you need to borrow and how you’ll use the loan to advance your business.

More importantly, your business proposal should outline how you plan to pay the bank back. A few things you can write out to accomplish this include:

• Three-to-five-year sales forecasts
• Cash flow projections
• Expense estimates

The more detail you include, the better. But don’t crunch a bunch of numbers on the very first page — make sure your proposal is clearly outlined and all information is grouped logically.

Break down your backup loan repayment plan.

Part of your business proposal’s job is to convince the bank that you can pay them back, whether you meet your sales projections or not. To demonstrate this, show proof of collateral (or something that secures the loan) in case things don’t go as planned after you invest in assets like new real estate, equipment, or inventory for your business.

Simplify the business plan proposal for the bank loan process.

To enhance your business plan proposal’s effectiveness for a bank loan, consider simplifying it. Create your own business proposal and make sure you have the documents required for loan approval to jump-start your path to success. It’s easy to create a PDF online for your bank loan proposal, so it’s easily accessible to share with others for feedback.

Explore everything you can do with Adobe Acrobat today.

How to write a business plan for a bank loan?

Whether you need a bank loan to start up a new business, grow an existing business or anything in between, writing a business plan can help make it a reality!

It involves outlining your goals and explaining how you plan to achieve them. A professional business plan is crucial to obtaining a bank loan and planning your outlook for both the short and long-term future.

Yet, most entrepreneurs view writing a business plan as a daunting task. But, it doesn't have to be!

In this guide, we'll cover what writing a business plan for a bank loan entails, why you need to write one, what tool you should use and the content that should be included.

Ready? Let's get started!

In this guide:

What is a business plan?

Do i need a business plan to secure a business loan, do banks actually look at business plans or is it just a box-ticking exercise, what do banks look for in a business plans, what tool should i use to write a business plan for a bank loan, what does a business plan for a bank loan look like, how long does a business plan for a bank loan need to be, key financial metrics and ratios banks look at when deciding on a loan application, examples and templates of business plans for a bank loan.

A business plan is a written document that contains two key parts:

• A written presentation that outlines what the company does, its medium term objectives and explains how it plans to achieve them.
• A financial plan that includes a cash flow statement, profit and loss statement and a balance sheet.

To get a business loan approved you need to convince the lender that your business will be able to repay it.

Regulated lenders also have legal obligations to demonstrate to their regulator that they are lending responsibly, meaning that your business can afford the loan.

Therefore, whilst a business plan is not strickly necessary to obtain a business loan, most banks will likely ask you to provide one, as it provides an objective way of assessing your borrowing capacity and to demonstrate affordability.

Imagine the following situation, a business borrows £100k from a regulated bank, and then goes bust. The regulator decides to investigate the bank. The bank can then provide the business plan to help demonstrate that the loan was affordable and that it behaved responsibly.

Most banks will look at your business plan when you hand in a loan application. How in-depth the bank looks at it though will depend on whether you are borrowing against assets or cash flow.

Asset-based lending

Borrowing against assets involves lending money to businesses whilst using their assets as collateral. These loans are also called secured loans.

Secured loans help reduce risks for lenders, they can seize the collateral if the borrower is unable to repay and sell the asset to recoup part of their losses. That's what happens with mortgages, for example.

Banks usually have pre-set loan-to-value ratios (LTVs) for the most common types of assets (property, equipment, vehicles etc.).

A loan-to-value assessment simply compares the appraised value of your asset against the value of the business loan.

For example, if you're buying a car worth £10,000 and the LTV ratio used by the bank is 70%, they can lend you up to £7,000 and will take the car as collateral.

The bank still needs to assess that you can afford the £7,000 business loan. They might ask you for a business plan, but might decide not to do so given that it's a small amount. They might simply look at your trading history or ask for a personal guarantee from the business owner instead.

BDC Bank - a Canadian bank - says that "financial institutions don’t use the same loan-to-value ratio for all asset types because of different asset liquidity levels".

In layman terms, liquidity means how easy it is to sale the asset. If it's a delivery van, it's very easy as there is an established secondhand market (high liquidity), if it's a chemical plant it might take up to a year (low liquidity).

In a nutshell, the easier it is to sale the asset (if it needs to be seized), the higher the loan amount.

According to BDC Bank , likely LTV ratios for common asset types are:

• Marketable securities (high in liquidity): 90%
• Accounts receivables: 75%
• Commercial and industrial real estate: 65% to 100%
• Inventory (low in liquidity): 50%.

Capital Source Group - an alternate lender - says that some banks require a down payment of up to 20% of the market value of the equipment, referring to firms seeking finance to purchase key equipment and mention an indicative baseline LTV ratio of 50%.

Cash-flow-based lending

As we've seen above, asset-based lending is relatively straighforward, and lower risk as the asset is used as collateral. The decision making is more complicated if your business borrows against cash flows (for e.g. working capital purposes).

Cash-flow-based borrowing involves lending money to businesses based on their predicted cash flows. The bank has to assess how much you can borrow based on historical and projected financials.

Doing so requires to have a clear understanding of the future cash flows of the business, which can only be obtained through a business plan.

Most banks ask for business plans when you apply for a business loan because they need it to understand:

Who the borrower is

Whether or not there is collateral.

• If there is a trading history that supports the cash flow forecast
• What borrowing capacity and affordability can be inferred from the forecast

Firstly, the bank has to understand what entity or person it is lending money to. For example, if you take over a business, you could buy either its assets or shares.

If you were to buy their assets, a new company would likely be created but if you were to purchase their shares, you could do it directly or via a holding company (likelier option).

Depending on which option you choose, the bank has to decide whether it's lending to your current business, yourself or the holding company. The answer to this question then determines the level of risk the bank is undertaking.

Next, the bank has to decide whether or not there is sufficient collateral. Can it secure the loan against the business assets or does it need to request a personal warranty from the business owner(s)?

It will assess:

• Whether or not your current business has any assets that can be used as collateral
• If you, the business owner, have a house or cash in the bank or can offer a credible personal guarantee
• Whether or not the holding company will provide its shares as collateral or if it needs to ask its shareholders for a personal guarantee (or both)

Does the trading history supports the cash flow forecast

The bank will want to know if there is any trading history to support your cash flow forecast.

If there isn't, it becomes harder to judge and riskier from a lender's viewpoint.

Borrowing capacity and affordability: total indebtedness and credit metrics

Lastly, the bank will estimate your business credit score taking into consideration: whether or not you have any outstanding debt, what your past repayments were like, and credit metrics such as fixed charge coverage ratio, net debt-to-equity ratio, and interest coverage ratio (we'll detail these 3 ratios later in this guide).

Create your business plan online!

Get a professional business plan to support your application for bank loan.

Writing a business plan can be both tedious and difficult if you start from scratch. Luckily for you, online business plan software can help you write a professional plan in no time.

There are several advantages to using specialised software like The Business Plan Shop:

• You are guided through the writing process by detailed instructions and examples for each part of the plan
• You can be inspired by already written business plan templates
• You can easily make your financial forecast by letting the software take care of the financial calculations for you
• You get a professional document, formatted and ready to be sent to your bank
• You can easily compare your forecast against actuals from your accounting system to ensure you are on track to deliver your plan, and adjust your forecast to keep it up to date as time goes by

If you are interested in this type of solution, you can try our software for free by signing up to The Business Plan Shop today .

There are seven key sections that any business plan for a bank loan must include:

• Executive summary
• Company Overview
• Products and services
• Market analysis
• Financial projections

Let's have a look at each one in more detail.

1. Executive summary

Your executive summary should provide the bank with a quick snapshot of your business. Remember that this is the first section of your business plan that they will look at - you need to keep them interested and do not need to go into depth.

Instead, outline who you are (what type of business) and what goods or services you sell. You'll also need to give them a glimpse of your financial projections (expected revenues and profitability).

Lastly, you should explain what are your total funding requirements and how much you are seeking to borrow from the bank.

2. Company Overview

In this section, you should explain what structure your business takes up (sole trader, partnership or limited liability company). This way, the bank understands whether or not you are liable if your business defaults on its loan. If you are not they might ask you for a personal guarantee.

If you are a partnership or limited liability company, state who your partners are and what percentage of the business they own. Also, outline any skills and experience they have that make them suitable for their role.

Finally, you should state where your business(es) are located and why that particular location was chosen (for example, it could be because of the parking slots available or transport links, making it very accessible for potential customers).

3. Products and services

You should include a detailed list of the products or services that you sell. Whilst you don't have to specify every single item or service, you should aim to include all of the key ones.

For example, for a hair salon, this might be hair care, washing, stylish haircuts, combing, hair colouring, waving, and hair straightening.

4. Market analysis

The market analysis section of your business plan for a bank loan is where you bring together your local and national market research. Using charts and graphs along with text makes it easier to illustrate your points clearly.

You should also state who you plan to target and the competitors in your local market. For example, if you were a coffee shop business, you could target people seeking a takeaway coffee, those looking for a lunch or snack or people looking for a place to work.

Finally, you should state the regulation in effect in the local market and whether there are any plans to make changes in the future (by the council for example).

5. Strategy

Your strategy section helps explain how you plan to make your business a success. Both marketing and pricing strategies feature in this section.

Explain how you've determined your prices and whether or not they differ from your competitors. Remember that this will depend on your overall pricing strategy (cost-plus pricing, competitive, price skimming, etc.).

Your marketing plan should explain how you plan to attract and retain customers. For example, you could have an attractive storefront with your logo to encourage potential customers to visit inside. You might also offer loyalty cards (for example, buy 3 burgers, get the fourth one free).

Finally, key milestones must also be outlined so that both parties are aware of what needs to be achieved within an agreed-upon timeframe along with measures taken against any foreseeable risks and mitigants related thereto.

6. Operations

The operations section of your business plan for a bank loan should include information about your staffing team. List any current and future recruitment plans, employee skills, experience and what roles they are going to take up.

Plus, you should state what suppliers you chose and why. For example, you might have chosen a particular supplier thanks to their eco-friendly stance or brand reputation.

7. Financial projections

Arguably the most important section in your business plan for a bank, your financial projections help the bank decide whether or not they should lend to your company.

This section includes your balance sheet, profit and loss statement and cash flow forecast. Figures from these three statements are used to compute key ratios (see the section below).

Profit and loss statement

A projected P&L statement shows how much money the company might make and how much it will grow in the future.

It helps stakeholders understand how successful the company could be.

Balance sheet

A balance sheet shows what your business owns (assets), what it owes (liabilities), and what has been invested by the owners (equity).

Looking at a balance sheet enables investors, lenders, and business owners assess the capital structure of the business.

One key aspect of this analysis is achieved by calculating key liquidity (short-term) and solvability (long-term) ratios to understand if the company can pay its debts as they fall due.

Cash flow statement

A projected cash flow statement is a document used to plan out how much cash a your business will generate (inflows) and spend over a certain period (outflows).

This document shows the expected cash flows from the operations, investments and other financial activities.

Having this information can help you decide how much money your business needs to save for future expenses or investments, as well as anticipate potential cash shortfalls.

Like most business plans, there's no specific number of pages that yours must have. A good rule of thumb, however, is to keep it between 15 and 35 pages.

As long as you've covered all of the key sections, ranging from the executive summary to the financial projections, your business plan for a bank loan should be good to go.

Remember, quality is more important than quantity.

Get a professional business plan to support your bank loan application.

It's worth noting that ratio targets set by lenders are industry dependent.

There are usually three key financial ratios that banks calculate before lending money:

1. Fixed charged coverage ratio

This solvency ratio assesses how much headroom a business has over its upcoming debt repayments.

It is calculated by dividing the Cash flow available for debt service (or CFADS), which measures how much cash flow is available to pay off debt obligations, by the amount to be paid to service the debt (interest plus principal repayments).

It is one of the main ratios used by lenders to assess the borrowing capacity and the financial risk of a given business.

For businesses utilising bank debt, lenders usually expect the fixed charge coverage ratio to be above 2.0x, which implies that the business is expected to generate twice as much cash as is needed to service the debt, leaving a healthy buffer.

In any case, the ratio should be above 1.0x, below 1.0x the business is not generating enough cash to service its debt which puts lenders at risk.

For example, if your business records a CFADS of £500,000 and total debt service amounting to £250,000 (£50,000 of interest payments, and £200,000 of principal repayments), it will have a fixed charge coverage ratio of 2.0x.

2. Debt to EBITDA

This solvency ratio is used to assess the level of debt and borrowing capacity of the business. It compares the level of debt to the firm’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), used as a proxy for the operating cash flow.

For example, if your company has debt worth £20m and an EBITDA of £5M, your debt to EBITDA ratio would be £20m/£5m = 4.0x.

In simple terms, a company with a debt to EBITDA ratio of 4.0x would need at least 4 years to repay its debt. Whether or not this is too high will depend on the sector and the risk appetite of the lender.

3. Interest coverage ratio 

This solvency ratio is commonly used by lenders to measure a business's ability to pay interest on its debt. It compares the firm’s EBITDA, used as a proxy for the operating cash flow, with the amount of interest expense due in a financial year. 

For example, if your business has an EBITDA of £500,000 and interest expenses amounting to £50,000, it will have an interest coverage ratio of 10.0x.

The rationale behind this ratio is that, if the company was to default on its debt, lenders could potentially agree to delay the principal repayments as long as the company remains able to at least pay the interest. In that scenario, their capital would remain at risk but lenders would still be able to earn a return.

The higher the interest coverage ratio the better. Targets set by lenders are industry dependent. An interest coverage ratio higher than 4.0x is generally a good starting point.

Most of the business plan templates offered by The Business Plan Shop are examples of companies seeking bank loans and so can be used to structure your own plan.

We have templates to fit various industries including hospitality, retail, services, construction, industrials and more.

We hope that this guide has helped you to better understand how to write a business plan for a bank loan. Do not hesitate to contact us if you still have questions.

Also on The Business Plan Shop

• 5-years business plans explained
• Business plan vs budget: what's the difference?
• Business plan structure: an in-depth guide

Know someone looking to take out a bank loan for their business? Share this article with them!

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

Create a convincing business plan

Assess the profitability of your business idea and create a persuasive business plan to pitch to investors

500,000+ entrepreneurs have already tried our solution - why not join them?

Not ready to try our on-line tool ? Learn more about our solution here

Need some inspiration for your business plan?

Subscribe to The Business Plan Shop and gain access to our business plan template library.

Need a professional business plan? Discover our solution

Write your business plan with ease!

It's easy to create a professional business plan with The Business Plan Shop

Want to find out more before you try? Learn more about our solution here

How to Write an SBA Business Plan + Template

Noah Parsons

10 min. read

Updated November 21, 2023

Applying for a Small Business Administration loan typically requires a business plan.

Unfortunately, there’s no SBA loan business plan format that guarantees approval. The SBA even states you should “pick a business plan format that works for you.” 

While I agree with this sentiment, I’ve found that entrepreneurs who explain how funds will be used and how they will repay the loan tend to be more successful. 

Luckily, these details can be covered using our SBA-lender-approved business plan format . I’ll go over that structure in this article, and focus on the sections that the SBA prioritizes, so you can maximize your chances of getting funded .

You can even download a free SBA-lender-approved business plan template to fill out as you read. 

Let’s get started.

• Why you need a business plan for SBA loans

SBA loans require good documentation of your business and personal finances. You’ll need to pull together your past tax returns, bank statements, and various application forms depending on the type of SBA loan you apply for.

The bank issuing the loan will also want to know about the future of your business. 

They’ll want to see how the loan will be used and if future cash flow projections are realistic and indicate you can afford loan payments.

That’s where writing an SBA business plan comes in. 

Not only will your business plan describe your business to the lender, but it will include the financial projections the bank will use to determine if you qualify for the loan .

• What your business plan should include, according to the SBA

Business plans for SBA loans follow a fairly standard structure, but that doesn’t mean you need to follow it exactly. 

The SBA even recommends adjusting the plan outline to serve your needs. If a section does not apply to your business, it’s fine just to remove it.

Here’s the successful business plan structure I recommend for SBA loans:

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

1. Executive summary

A great executive summary is a short, simple overview of your business. It should be easy for a loan officer to read and clearly understand what your business does. 

When applying for an SBA loan, highlight your: 

• Business opportunity
• Financial forecast
• How much money you want to borrow and how it will be used

Remember, an executive summary should be short and to the point. The rest of your business plan will provide additional details.

[Dig deeper: How to write an executive summary ]

2. Company description

Some people call this section “Products and Services.” Either option is fine. The important thing is that you use this section to explain what your business opportunity is. 

You need to cover: 

• The problem you solve
• Who you’re solving it for
• What your solution is and why it’s better

Be specific and tell the story of your business and your customers. Focus on your strengths and what sets you apart from competitors. 

If your company is developing a product, include information on:

• What the product life cycle looks like
• Intellectual property filings
• Current research and development

If these topics don’t apply to your product, that’s fine. Just be sure that the description of what you sell is clear.

3. Market analysis

The market analysis chapter explains who your customers are. It provides an overview of your target market, competition, and industry.

Your target market is essentially a description of your ideal customers. Be sure to include specific demographic information (like age, gender, location, income) and psychographic information (hobbies, purchasing behaviors). 

This data should reinforce that your target market needs your solution .

It’s helpful to also include information on the size of your target market . Lenders will want to see evidence of enough potential customers to drive growth. 

While your target market information describes your customers, an industry overview discusses the type of business you’re in and its potential for growth. 

For example: If you’re starting a fast-casual restaurant, your industry overview might discuss the increased interest in fast-casual dining and how more people are eating in these types of restaurants every year. 

Finally, you’ll need to include a competitive analysis . This is a list of current competitors and alternatives, with explanations of why your business is a better option. 

Your goal is to show how your business is unique, what opportunities and threats there are, and how you plan to address the competition.

4. Organization and management

Also known as your company overview, this section is where you describe your legal structure, history, and team .

For your SBA loan application, you should focus on describing who is managing the business as clearly as possible. 

You may want to include an organizational chart. You should provide detailed resumes for everyone in leadership positions. Each team member’s experience, skills and professional qualifications can mitigate risk in the eyes of a lender .

To show you’re thinking ahead, it’s also helpful to include key positions you plan to fill as you grow. 

5. Sales and marketing plan

Your goal in this section is to summarize how you will attract, retain, and sell to your customers.

The marketing strategies and sales methods you describe should always have the customer top of mind, and demonstrate that you know how to connect with them. 

To help a loan officer visualize this, you can provide examples of marketing messaging, visuals, and promotions. If you have any research or results to show that your strategy has merit, include those as well. 

6. Financial projections

SBA lenders typically require 5 years of financial projections — including profit and loss statements , balance sheets , and cash flow statements . 

Be sure to include the SBA loan in your projections in the following areas: 

• A liability on your balance sheet.
• Payments on your cash flow.
• Interest expenses on your profit and loss statement. 

I’ll dive into specific details of what you should focus on in the “how to improve your chances” section.

Your first year of financial projections should include monthly details. After that, annual summaries are usually sufficient for most SBA lenders. Occasionally, a lender might require 24 months of monthly projections, so check with your bank before submitting your business plan. 

If your business is up and running, you must also provide historical financial reports for the past 12-24 months of operations—including income statements and a current balance sheet.

Typically, you will also need to provide reports on your personal finances , including any assets you have, such as a home or car. 

Finally, include a section explaining your use of funds—what exactly you plan to use the loan for.

7. Appendix

The appendix is your chance to provide additional documents that support sections of your business plan. 

When applying for a loan, these may include:

• Employee resumes
• Licenses and permits
• Patents and other legal documents
• Historical financial statements
• Credit histories

Don’t worry about stuffing your appendix full of additional documentation. Only include information if you believe it will strengthen your approval chances, or if your lender specifically asks for it.

• How to improve your chances of being approved for an SBA loan

Your SBA business plan needs to focus on the loan you are applying for and how that will impact your business financially. 

Make sure to include the following information in your financial plan to increase your chances of success with your lender:

Funding request 

In your executive summary, document how much money you are asking for. It’s best to put your number where it can be clearly read, instead of trying to bury it deep within your business plan.

Remember, there are limitations to how much you can borrow through SBA-backed loans.  Most have a maximum loan amount of $5 million, while SBA Express loans have a maximum loan amount of $350,000. 

Use of funds

You should also describe how you plan to use the loan and which aspects of the business you want to invest in. 

Some SBA loans are designed specifically for expanding export businesses or funding real estate transactions. So, make sure your use of funds description is appropriate for the loan you are applying for.

Cash flow forecast

Be sure to include the loan in your cash flow statements and projections . You want to demonstrate that you’ve planned how you will use and repay the loan.

You need to show:

• When you anticipate receiving the loan.
• How the loan will impact your finances. 
• Loan payments for the life of the loan. 

Having this prepared won’t just increase the chances of your application being approved—It  will make it much easier to manage the loan after you receive funding . 

Balance sheet 

You’ll also want to put the loan on your projected balance sheet , and show how the loan will get paid down over time. 

The money you owe will show up on your balance sheet as a liability, while the cash you receive from the loan will be an asset. Over time, your forecasted balance sheet will show that the loan is getting paid back. 

Your lender will want to see that you have forecasted this repayment properly.

Profit & Loss forecast

Your P&L should include the interest expenses for the loan, and show how the interest will impact your profitability in the coming months and years.

• How long does an SBA business plan need to be?

The SBA doesn’t have an official recommended or required business plan length . As a general rule of thumb, you should make your business plan as short and concise as possible. 

Your business plan is going to be reviewed by a bank loan officer, and they will be less than excited about the prospect of reading a 50-page business plan.

If possible, keep the written portion of your business plan between 10-15 pages. Your financial forecasts will take up several additional pages. 

If you’re struggling to keep it short, try a one-page plan

A great way to start your business plan is with a simple, one-page business plan that provides a brief and compelling overview of your business. 

A good one-page plan is easy to read and visually appealing. Once you have your one-page plan, you can expand on the ideas to develop your complete written business plan, and use the one-page plan as your executive summary. 

Loan officers will appreciate a concise overview of your business that provides the summary they need before they start looking at your complete business plan and financial plan .

• Resources and tools for writing an SBA business plan

Remember, you can download a free SBA-lender-approved business plan template . It includes detailed instructions to help you write each section, expert guidance and tips, and is formatted as lenders and investors expect.

If you’re looking for a more powerful plan writing tool, one that can also help you create financial forecasts for the use of your loan, I recommend you check out LivePlan . 

With LivePlan, you get:

• AI-powered recommendations: Generate and rewrite sections of your plan to be more professional and persuasive.
• Step-by-step instructions: In-app examples, tutorials, and tips to help you write an impressive business plan.
• Automatic financials: Skip the spreadsheets and complex formulas, and quickly create accurate financial forecasts with everything a lender needs.
• A built-in pitch presentation: Print or share your full business plan, one-page pitch, and financial reports—all with a professional and polished look.

Whether you use the template, LivePlan, or try writing a business plan yourself, following the structure and tips from this article will improve your chances of getting an SBA-backed loan. 

And for additional SBA-focused resources, check out our guide on how to get an SBA loan .   

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

Related Articles

6 Min. Read

What to Do When You Need a Disaster Loan

12 Min. Read

10 Reasons You Don’t Qualify for an SBA Disaster Loan

4 Min. Read

The Different SBA Loan Programs Explained

The Bplans Newsletter

The Bplans Weekly

Subscribe now for weekly advice and free downloadable resources to help start and grow your business.

We care about your privacy. See our privacy policy .

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

How to write a business plan for a loan

Your business plan is a living document – it's something you'll revisit to check that you're reaching your goals and making the most of your venture. You may also need one if you're looking for funders to support and invest in your idea. Here's how it works.

What to include in the business plan

Applying for funding.

Your business plan is essentially an outline of your business and the market. It explains how you intend to make a profit and why your venture is destined for success. It includes key objectives, sales and marketing strategies, financial forecasts and more.

Writing your business plan should allow you to:

Clarify your idea

Identify potential problems

Establish your goals

Measure progress

Map out sales, marketing and operations

Identify issues and how to overcome them

Set out your expected financial return 

Convince others to back your business

Figure out what funding you need

When using Funding Options to find finance, lenders typically require your accounts, bank statements and management accounts, if available. You won't usually have to provide your business plan (although you might be asked if you're a new business). 

The Prince's Trust website can download a free  business plan template  and other related resources. Although templates are undoubtedly helpful, don't forget to tailor your business plan to the target audience. Check in with the recipient to see if there are any details they want your business plan to address.  

Keep it concise

Begin with an executive summary

There's no need to include every single detail – you can elaborate elsewhere

Proofread the document before sending it out

If appropriate, use charts for clarity

1. Executive summary

Like many other business documents, business plans begin with an executive summary. (This might be easier to write after you've written everything else.) The executive summary should hook the reader. 

It should provide an overview of your business plan and include details of what makes you different and how much money you intend to make/spend. 

2. Your idea/business

Next, it's time to elaborate on your idea. 

Identify the problem you're trying to solve or the opportunity you're tapping into. Why will people want to buy your product or service? Talk about your industry experience and business structure, i.e. who owns it and its legal structure.

3. Market information

In this section, include details of the market research you've conducted; ideally, this will comprise quantitative and qualitative research. 

Outline whom you're selling to (your customer personas) and how you intend to get your idea noticed. Include an analysis of market trends, details of competitors and how you think your business stands out from the crowd. 

4. SWOT analysis

Your SWOT – strengths, weaknesses, opportunities and threats – will enable you to go into more detail about how to make the most of your options. Ideally, your SWOT analysis should take up no more than a single page, and you can format it as a grid with one square dedicated to each section. 

5. Strategy 

This is where you go more in-depth about how you'll run the business. Dedicate sections to marketing and sales (e.g. your pricing strategy and promotional approaches), operations (e.g. your business premises) and your team (e.g. how you'll structure it). 

6. Financials

Your financials are essential to your business plan, particularly if you're looking for investment. You need to make sure they're accurate and realistic. You may want to consider getting expert, qualified advice regarding your forecasts. 

Your information will also depend on how long you've been trading. This could be an excellent place to include visual representations like graphs and charts. 

Include the following:

Sales forecasts

Profit and loss forecast

Cash flow statement

Balance sheet

7. Appendices

Because your business plan should be concise, you could include an appendix at the end with additional information about each section, details that the reader should know about but that you don't want to have in the body of the business plan. 

If you're looking for additional finance to get your venture off the ground, or if you need to fund your established business' growth plans, Funding Options can help you find out what you could be eligible for. Just tell us how much you need, how quickly and what it's for and our  Funding Cloud  technology will compare 120+ lenders. 

Chief Commercial Officer

Stuart is Chief Commercial Officer at Funding Options where he plays a key role in driving the growth of the business and its relationships with more than 120 partners. A finance industry veteran, he has a strong background in alternative finance, corporate and commercial banking, as well as global transaction banking.

• Business Loans

Check your eligibility with our online form without affecting your credit score.

Related Articles

Subscribe to our newsletter today.

Sign up for the best of Funding Options sent straight to your inbox.

• Terms of Service
• Treating Customers Fairly
• Cookies settings
• [email protected]
• 0333 344 1015

Disclaimer: Funding Options helps UK firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. We are also able to make insurance introductions. Funding Options may receive a commission or finder’s fee for effecting such finance and insurance introductions. *Eligibility criteria apply - see Tide website for full details. Funding Options Ltd is incorporated and registered in England and Wales with company number 07739337 and registered office at 4th Floor The Featherstone Building, 66 City Road, London, EC1Y 2AL. © Funding Options Ltd · Authorised and Regulated by the Financial Conduct Authority · Reference Number 727867

• Customer Reviews
• Net 30 Account
• Wise Services
• Steps & Timeline
• Work at a Glance
• Market Research at a Glance
• Business Plan Writing Services
• Bank Business Plan
• Investor Business Plan
• Franchise Business Plan
• Cannabis Business Plan
• Strategic Business Plan
• Corporate Business Plan
• Merge and Acquisition Business Plan (M&A)
• Private Placement Memorandums (PPM)
• Sample Business Plans
• Professional Feasibility Study
• PowerPoint Presentations
• Pitch Deck Presentation Services
• Business Plan Printing
• Market Research
• L-1 Business Plan
• E-2 Business Plan
• EB-5 Business Plan
• EB-5 Regional Centers
• Immigration Attorneys
• Nonprofit Business Plan
• Exit Business Planning
• Business Planning
• Business Formation
• Business License
• Business Website
• Business Branding
• Business Bank Account
• Digital Marketing
• Business Funding Resources
• Small Business Loans
• Venture Capital
• Net 30 Apply

• Frequently Asked Questions
• Business Credit Cards
• Talk to Us 1-800-496-1056

How to Write a Business Plan for Loan with Free Template

A business plan for bank loan is instrumental in getting a loan and funding for your business. When you approach the lenders or investors with a proper business plan , you increase your chances of getting a loan for your business plan. 

Why Do You Need Business Plan for Bank Loan?

• A Business Plan Helps You Get Loans and Funding

A Business Plan Increases Your Chances of Business Success

• A Business Plan Helps you Grow Strategically
• A Business Plan Helps You Measure Business Growth
• What is included business plan for bank loan?

Process of Writing a Business Plan for a Bank Loan

How to create a business plan for a loan with a free template.

• Sample Of Business Plan For Loan And Funding

Wondering how to write a business plan for a loan that could get you approved? Read our guide on the topic, check the business plan sample for bank loan, and use our business plan for loan template to make a killer business plan.

Get our affordable business plan writing services now!

A business plan clears your mind about business, helps you prepare for it, and makes you a good candidate for loans, funding, and investments. In short, writing a business plan for a loan is worth it. 

For Later: To learn more about how to write a business plan specifically for a bank loan, check out our bank ready business plan .

A Business Plan Helps You Get Loans and Funding 

When you present your business idea before investors and lenders (or anyone else you are looking to for funding), you look serious with a business plan. 

You may not need a book in the name of a business plan but you need to present your business idea in a convincing way.

When they know your business idea is sound and you can return the loan, they will be inclined to give you a loan. 

A research on the impact of business planning shows that the businesses that start with proper planning have more chances of success. 

A business plan helps both the new firms and the established firms. 

A Business Plan Helps you Grow Strategically 

A business plan is a road-map for your business growth, whether you use it as a roadmap or not. When you put effort into making a business plan, you set priorities, establish goals, create a strategy for achieving those goals, and set a time frame for achieving those goals. 

A Business Plan Helps You Measure Business Growth 

The market conditions will never be exactly the same as you had expected in the business plan. 

Here, your business plan will help you compare planning against actual developments. You can see if you are going in the right direction as you planned or you need to change course.

Maybe you need to make a new business plan as your business might take a different shape than you expected.

What is included business plan for bank loan?

A business plan starts with an executive summary that briefly describes the business idea and ends with the appendix that includes lengthy financial documents or other reference materials. 

These are the parts of a business plan. 

• Executive Summary
• Business Overview 
• Business Objectives and Goals
• Competitor Analysis 
• Market Analysis  
• Product and Services
• Operational Plan 
• Business Structure and Management
• Financial Analysis
• Marketing and Sales

Let’s see what you will write in each of the above-listed sections of the business plan for loan.

Executive Summary: Write this section after you have completed the business plan. Briefly discuss your business idea and its parts. 

Business Overview: Include basic details about your business like business name, address, year established, etc. 

Business Objectives and Goals: Discuss what are the short-term and long-term business goals and how do you plan to achieve them. 

Competitor Analysis: Conduct an analysis of your direct and indirect competitors. A SWOT analysis of your competitors can help you identify opportunities for creating your competitive advantage. 

Market Analysis: Discuss market conditions in your industry. Is your target industry seeing a growth trend or a decline? What are the driving factors for growth in your industry?

Product and Services: Introduce the products and services of your business, how your product or service works, how you will price them, and what is your sales and distribution strategy for your products or services. 

Operational Plan: Explain your operation plan and discuss how you plan to run your business. The operation plan will discuss organizational structure, team working, and almost all aspects of business operations. 

Business Structure and Management: Introduce business managers and key employees here. Also briefly discuss the legal structure of your business like if you are C-corp, S-corp, LLC , etc. 

Financial Analysis: Discuss initial business costs, running cost, business break even cost, the amount of funding you need and how you will spend that funding. Also create a financial forecast for your business. 

Marketing and Sales: This section will include the marketing and sales plan for your products or services.

Try to make it detailed so that the bank or your lender can understand how you will make your business profitable and if you will have solid capacity to pay back the loans. 

Appendix: Anything you didn’t or couldn’t mention in the previous business plan sections will go here. For example, you can include extended financial reports, research about your industry, detailed CVs of your team and management, etc. 

Download Free Example Business Plan for Loan

Make business plan for loan quick and easy, use this business plan template for loan. 

A template is an easy and straightforward way to write a business plan. A template gives you step by step instructions on what each business section is about and how to write it. 

Wisebusinessplans offers business plan for bank loan template that guides you with questions in every section of the business. Simply answer the questions in each section and your business plan will be ready in no time. 

These are the steps to writing a business plan for small business loan with a template: 

Collection Business Information : Make business information available, keep business documentation at hand as you will need to use data from these documents. 

Write Business Plan : Proceed with writing the business plan. You will not stop until you reach financial analysis. 

Prepare Financial Projections : When you are applying for a debt, the lender will most closely look at your financial projections. Take your time to write financial projections. Make sure you sound convincing.

Also, don’t bury information in the spreadsheets or too much data. State inference you draw from the data first, include necessary financial projections in the business plan and put the rest of them into the business plan appendix. 

Proofread and Revise : Business plan is a thorough document. It is highly likely to leave some holes in the first draft. Proofread your business plan at least once to check for language and factual mistakes. You also come up with a new and better way of saying something. 

Get Second Opinion : Engage a trusted friend, or family member, or an advisor and get their opinion on your business plan. Their unique perspective will force you to improve it,

Sample Of Business Plan For Loan And Funding 

Want to see a sample on the quest of ‘how to make a business plan for a loan’, check the link below.This  business plan for bank loan example will help you see how an actual business plan for a bank looks like and what is the end-product you are working towards. 

Business Plan for Loan

Get this simple business plan template and make better business plan

 A business plan is essential when applying for a loan as it provides lenders with a comprehensive understanding of your business, including its objectives, financial projections, market analysis, and operational strategies. It demonstrates your preparedness and increases the likelihood of securing funding.

To write a business plan for a loan, start by outlining your executive summary, company description, market analysis, products or services, marketing and sales strategies, organizational structure, financial projections, and appendices. Utilizing a free business plan template can help guide you through the process.

 Free business plan templates are widely available online. You can search for reputable websites or organizations that offer templates specifically designed for writing business plans for loans. These templates typically provide a structured format and guidance to ensure you include all the necessary components.

The financial projections section of your business plan should include a sales forecast, cash flow statement, profit and loss statement, and balance sheet. It is important to provide realistic estimates based on thorough market research and a detailed understanding of your business’s financial performance.

Absolutely. Seeking assistance or feedback when writing your business plan for a loan is highly recommended. You can consult with business advisors, mentors, or industry experts who can provide valuable insights and help ensure your business plan is comprehensive, well-structured, and compelling to potential lenders.

Want to write a business plan?

Hire our professional business plan writers now!

Leave a Reply

Your email address will not be published. Required fields are marked *

Quick Links

• Investor Business Plans
• M&A Business Plan
• Private Placement
• Feasibility Study
• Hire a Business Plan Writer
• Business Valuation Calculator
• Business Plan Examples
• Real Estate Business Plan
• Business Plan Template
• Business Plan Pricing Guide
• Business Plan Makeover
• SBA Loans, Bank Funding & Business Credit
• Finding & Qualifying for Business Grants
• Leadership for the New Manager
• Content Marketing for Beginners
• All About Crowdfunding
• EB-5 Regional Centers, A Step-By-Step Guide
• Logo Designer
• Landing Page
• PPC Advertising

• Business Entity
• Business Licensing
• Virtual Assistant
• Business Phone
• Business Address
• E-1 Visa Business Plan
• EB1-A Visa Business Plan
• EB1-C Visa Business Plan
• EB2-NIW Business Plan
• H1B Visa Business Plan
• O1 Visa Business Plan
• Business Brokers
• Merger & Acquisition Advisors
• Franchisors

Proud Sponsor of

• 1-800-496-1056

• (613) 800-0227

• +44 (1549) 409190

• +61 (2) 72510077

Bank Business Plan Template

Written by Dave Lavinsky

Bank Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their banks.

If you’re unfamiliar with creating a bank business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a bank business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What Is a Business Plan?

A business plan provides a snapshot of your bank as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan

If you’re looking to start a bank or grow your existing bank, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your bank to improve your chances of success. Your bank business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Banks

With regards to funding, the main sources of funding for a bank are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for banks.  

Finish Your Business Plan Today!

How to write a business plan for a bank.

If you want to start a bank or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your bank business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of bank you are running and the status. For example, are you a startup, do you have a bank that you would like to grow, or are you operating a chain of banks?

Next, provide an overview of each of the subsequent sections of your plan.

• Give a brief overview of the bank industry.
• Discuss the type of bank you are operating.
• Detail your direct competitors. Give an overview of your target customers.
• Provide a snapshot of your marketing strategy. Identify the key members of your team.
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of bank you are operating.

For example, you might specialize in one of the following types of banks:

• Commercial bank : this type of bank tends to concentrate on supporting businesses. Both large corporations and small businesses can turn to commercial banks if they need to open a checking or savings account, borrow money, obtain access to credit or transfer funds to companies in foreign markets.
• Credit union: this type of bank operates much like a traditional bank (issues loans, provides checking and savings accounts, etc.) but banks are for-profit whereas credit unions are not. Credit unions fall under the direction of their own members. They tend to serve people affiliated with a particular group, such as people living in the same area, low-income members of a community or armed service members. They also tend to charge lower fees and offer lower loan rates.
• Retail bank: retail banks can be traditional, brick-and-mortar brands that customers can access in-person, online, or through their mobile phones. They also offer general public financial products and services such as bank accounts, loans, credit cards, and insurance.
• Investment bank: this type of bank manages the trading of stocks, bonds, and other securities between companies and investors. They also advise individuals and corporations who need financial guidance, reorganize companies through mergers and acquisitions, manage investment portfolios or raise money for certain businesses and the federal government.

In addition to explaining the type of bank you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of clients served, the number of clients with positive reviews, reaching X number of clients served, etc.
• Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the bank industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the bank industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your bank business plan:

• How big is the bank industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your bank? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your bank business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, small businesses, families, and corporations.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of bank you operate. Clearly, corporations would respond to different marketing promotions than individuals, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

Finish Your Bank Business Plan in 1 Day!

Don’t you wish there was a faster, easier way to finish your business plan?

With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other banks.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes trust accounts, investment companies, or the stock market. You need to mention such competition as well.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of customers do they serve?
• What type of bank are they?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide loans and retirement savings accounts?
• Will you offer products or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a bank business plan, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of bank company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide savings accounts, auto loans, mortgage loans, or financial advice?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your bank. Document where your company is situated and mention how the site will impact your success. For example, is your bank located in a busy retail district, a business district, a standalone office, or purely online? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your bank marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• Reach out to websites
• Distribute flyers
• Engage in email marketing
• Advertise on social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your bank, including reconciling accounts, customer service, accounting, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to sign up your Xth customer, or when you hope to reach $X in revenue. It could also be when you expect to expand your bank to a new city.  

Management Team

To demonstrate your bank’s potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing banks. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a bank or successfully running a small financial advisory firm.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you see 5 clients per day, and/or offer sign up bonuses? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your bank, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a bank:

• Cost of furniture and office supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your bank location lease or a list of accounts and loans you plan to offer.  

Writing a business plan for your bank is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the bank industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful bank.  

Bank Business Plan Template FAQs

What is the easiest way to complete my bank business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily write your bank business plan.

How Do You Start a Bank Business?

Starting a bank business is easy with these 14 steps:

• Choose the Name for Your Bank Business
• Create Your Bank Business Plan
• Choose the Legal Structure for Your Bank Business
• Secure Startup Funding for Your Bank Business (If Needed)
• Secure a Location for Your Business
• Register Your Bank Business with the IRS
• Open a Business Bank Account
• Get a Business Credit Card
• Get the Required Business Licenses and Permits
• Get Business Insurance for Your Bank Business
• Buy or Lease the Right Bank Business Equipment
• Develop Your Bank Business Marketing Materials
• Purchase and Setup the Software Needed to Run Your Bank Business
• Open for Business

Don’t you wish there was a faster, easier way to finish your Bank business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how a Growthink business plan consultant can create your business plan for you.

Other Helpful Business Plan Articles & Templates

• Business Plan for Investors
• Bank/SBA Business Plan
• Operational/Strategic Planning Services
• L1 Visa Business Plan
• E1 Treaty Trader Visa Business Plan
• E2 Treaty Investor Visa Business Plan
• EB-1 Business Plan
• EB-2 NIW Business Plan
• EB-5 Business Plan
• Innovator Founder Visa Business Plan
• Start-Up Visa Business Plan
• Expansion Worker Visa Business Plan
• Manitoba MPNP Visa Business Plan
• Nova Scotia NSNP Visa Business Plan
• British Columbia BC PNP Visa Business Plan
• Self-Employed Visa Business Plan
• OINP Entrepreneur Stream Business Plan
• LMIA Owner Operator Business Plan
• ICT Work Permit Business Plan
• LMIA Mobility Program – C11 Entrepreneur Business Plan
• USMCA (ex-NAFTA) Business Plan
• Franchise Business Plan
• Landlord business plan
• Nonprofit Start-Up Business Plan
• USDA Business Plan
• Cannabis business plan
• Ecommerce business plan
• Online boutique business plan
• Mobile application business plan
• Daycare business plan
• Restaurant business plan
• Food delivery business plan
• Real estate business plan
• Business Continuity Plan
• Pitch Deck Consulting Services
• Financial Due Diligence Services
• ICO whitepaper
• ICO consulting services
• Confidential Information Memorandum
• Private Placement Memorandum
• Feasibility study
• Fractional CFO
• How it works
• Business Plan Examples

How to Write a Business Plan to Start a Bank

FEB.10, 2024

Bank Business Plan Checklist

A bank business plan is a document that describes the bank’s goals, strategies, operations, and financial projections. It communicates the bank’s vision and value proposition to potential investors, regulators, and stakeholders. A SBA business plan should be clear, concise, and realistic. It should also cover all the essential aspects of the bank’s business model.

Here is a checklist of the main sections that you should keep in mind while building a bank business plan:

• Executive summary
• Company description
• Industry analysis
• Competitive analysis
• Service or product list
• Marketing and sales plan
• Operations plan
• Management team
• Funding request
• Financial plan

Sample Business Plan for Bank

The following is a bank business plan template that operates in the USA. This bank business plan example is regarding ABC Bank, and it includes the following sections:

Executive Summary

ABC Bank is a new bank for California’s SMBs and individuals. We offer convenient banking services tailored to our customers’ needs and preferences. We have a large target market with over 500,000 SMBs spending billions on banking services annually. We have the licenses and approvals to operate our bank and raised $20 million in seed funding. We are looking for another $30 million in debt financing.

Our goal is to launch our bank by the end of 2024 and achieve the following objectives in the first five years of operation:

• Acquire 100,000 customers and 10% market share
• Generate $100 million in annual revenue and $20 million in net profit
• Achieve a return on equity (ROE) of 15% and a return on assets (ROA) of 1.5%
• Expand our network to 10 branches and 50 ATMs
• Increase our brand awareness and customer loyalty

Our bank has great potential to succeed and grow in the banking industry. We invite you to read the rest of our microfinance business plan to learn about how to set up a business plan for the bank and how we will achieve our goals.

Industry Analysis

California has one of the biggest and most active banking industries in the US and the world. According to the Federal Deposit Insurance Corp , California has 128 financial institutions, with total assets exceeding $560 billion.

The California banking industry is regulated and supervised by various federal and state authorities. However, they also face several risks and challenges, such as:

• High competition and consolidation
• Increasing regulation and compliance
• Rising customer demand for digital and mobile banking
• Cyberattacks and data breaches
• Environmental and social issues

The banking industry in California is highly competitive and fragmented. According to the FDIC, the top 10 banks and thrifts in California by total deposits as of June 30, 2023, were:

Customer Analysis

We serve SMBs who need local, easy, and cheap banking. We divide our customers into four segments by size, industry, location, and needs: 

SMB Segment 1 – Tech SMBs in big cities of California. These are fast-growing, banking-intensive customers. They account for a fifth of our market share and a third of our revenue and are loyal and referable.

SMB Segment 2 – Entertainment SMBs in California’s entertainment hubs. These are high-profile, banking-heavy customers. They make up a sixth of our market and a fourth of our revenue and are loyal and influential.

SMB Segment 3 – Tourism SMBs in California’s tourist spots. These are seasonal, banking-dependent customers. They represent a quarter of our market and a fifth of our revenue and are loyal and satisfied.

SMB Segment 4 – Other SMBs in various regions of California. These are slow-growing, banking-light customers. They constitute two-fifths of our market and a quarter of our revenue and are loyal and stable.

Competitive Analysis

We compete with other banks and financial institutions that offer similar or substitute products and services to our target customers in our target market. We group our competitors into four categories based on their size and scope: 

1. National Banks

• Key Players – Bank of America, Wells Fargo, JPMorgan Chase, Citibank, U.S. Bank
• Strengths – Large customer base, strong brand, extensive branch/ATM network, innovation, robust operations, solid financial performance
• Weaknesses – High competition, regulatory costs, low customer satisfaction, high attrition
• Strategies – Maintain dominance through customer acquisition/retention, revenue growth, efficiency

2. Regional Banks

• Key Players – MUFG Union Bank, Bank of the West, First Republic Bank, Silicon Valley Bank, East West Bank
• Strengths – Loyal customer base, brand recognition, convenient branch/ATM network, flexible operations
• Weaknesses – Moderate competition, regulatory costs, customer attrition
• Strategies – Grow market presence through customer acquisition/retention, revenue optimization, efficiency

3. Community Banks

• Key Players – Mechanics Bank, Bank of Marin, Pacific Premier Bank, Tri Counties Bank, Luther Burbank Savings
• Strengths – Small loyal customer base, reputation, convenient branches, ability to adapt
• Weaknesses – Low innovation and technology adoption
• Strategies – Maintain niche identity through customer loyalty, revenue optimization, efficiency

4. Online Banks

• Key Players – Ally Bank, Capital One 360, Discover Bank, Chime Bank, Varo Bank
• Strengths – Large growing customer base, strong brand, no branches, lean operations, high efficiency
• Weaknesses – High competition, regulatory costs, low customer satisfaction and trust, high attrition
• Strategies – Disrupt the industry by acquiring/retaining customers, optimizing revenue, improving efficiency

Market Research

Our market research shows that:

• California has a large, competitive, growing banking market with 128 banks and $560 billion in assets.
• Our target customers are the SMBs in California, which is 99.8% of the businesses and employ 7.2-7.4 million employees.
• Our main competitors are national and regional banks in California that offer similar banking products and services.

We conclude that:

• Based on the information provided in our loan officer business plan , there is a promising business opportunity for us to venture into and establish a presence in the banking market in California.
• We should focus on the SMBs in California, as they have various unmet banking needs, preferences, behavior, and a high potential for growth and profitability.

Operations Plan

Our operational structure and processes form the basis of our operations plan, and they are as follows:

• Location and Layout – We have a network of 10 branches and 50 ATMs across our target area in California. We strategically place our branches and ATMs in convenient and high-traffic locations.
• Equipment and Technology – We use modern equipment and technology to provide our products and services. We have c omputers and software for banking functions; security systems to protect branches and ATMs; communication systems to communicate with customers and staff; i nventory and supplies to operate branches and ATMs.
• Suppliers and Vendors – We work with reliable suppliers and vendors that provide our inventory and supplies like cash, cards, paper, etc. We have supplier management systems to evaluate performance.
• Staff and Management – Our branches have staff like branch managers, customer service representatives, tellers, and ATM technicians with suitable qualifications and experience.
• Policies and Procedures – We have policies for customer service, cash handling, card handling, and paper handling to ensure quality, minimize losses, and comply with regulations. We use various tools and systems to implement these policies.

Management Team

The following individuals make up our management team:

• Earl Yao, CEO and Founder – Earl is responsible for establishing and guiding the bank’s vision, mission, strategy, and overall operations. He brings with him over 20 years of banking experience.
• Paula Wells, CFO and Co-Founder – Paula oversees financial planning, reporting, analysis, compliance, and risk management.
• Mark Hans, CTO – Mark leads our technology strategy, infrastructure, innovation, and digital transformation.
• Emma Smith, CMO – Emma is responsible for designing and implementing our marketing strategy and campaigns.
• David O’kane, COO – David manages the daily operations and processes of the bank ensuring our products and services meet the highest standards of quality and efficiency.

Financial Projections

Our assumptions and drivers form the basis of our financial projections, which are as follows:

Assumptions: We have made the following assumptions for our collection agency business plan :

• Start with 10 branches, 50 ATMs in January 2024
• Grow branches and ATMs 10% annually
• 10,000 customers per branch, 2,000 per ATM
• 5% average loan rate, 2% average deposit rate
• 80% average loan-to-deposit ratio
• $10 average fee per customer monthly
• $100,000 average operating expense per branch monthly
• $10,000 average operating expense per ATM monthly
• 25% average tax rate

Our financial projections are as per our:

• Projected Income Statement
• Projected Cash Flow Statement
• Projected Balance Sheet
• Projected Financial Ratios and Indicators

Select the Legal Framework for Your Bank

Our legal structure and requirements form the basis of our legal framework, which are as follows:

Legal Structure and Entity – We have chosen to incorporate our bank as a limited liability company (LLC) under the laws of California.

Members – We have two members who own and control our bank: Earl Yao and Paula Wells, the founders and co-founders of our bank.

Manager – We have appointed Mark Hans as our manager who oversees our bank’s day-to-day operations and activities.

Name – We have registered our bank’s name as ABC Bank LLC with the California Secretary of State. We have also obtained a trademark registration for our name and logo.

Registered Agent – We have designated XYZ Registered Agent Services LLC as our registered agent authorized to receive and handle legal notices and documents on behalf of our bank.

Licenses and Approvals – We have obtained the necessary licenses and approvals to operate our bank in California, including:

• Federal Deposit Insurance Corporation (FDIC) Insurance
• Federal Reserve System Membership
• California Department of Financial Protection and Innovation (DFPI) License
• Business License
• Employer Identification Number (EIN)
• Zoning and Building Permits

Legal Documents and Agreements – We have prepared and signed the necessary legal documents and agreements to form and operate our bank, including:

• Certificate of Formation
• Operating Agreement
• Membership Agreement
• Loan Agreement
• Card Agreement
• Paper Agreement

Keys to Success

We analyze our market, customers, competitors, and industry to determine our keys to success. We have identified the following keys to success for our bank.

Customer Satisfaction

Customer satisfaction is vital for any business, especially a bank relying on loyalty and referrals. It is the degree customers are happy with our products, services, and interactions. It is influenced by:

• Product and service quality – High-quality products and services that meet customer needs and preferences
• Customer service quality – Friendly, professional, and helpful customer service across channels
• Customer experience quality – Convenient, reliable, and secure customer access and transactions

We will measure satisfaction with surveys, feedback, mystery shopping, and net promoter scores. Our goal is a net promoter score of at least 8.

Operational Efficiency

Efficiency is key in a regulated, competitive environment. It is using resources and processes effectively to achieve goals and objectives. It is influenced by:

• Resource optimization – Effective and efficient use and control of capital, staff, and technology
• Process improvement – Streamlined, standardized processes measured for performance
• Performance management – Managing financial, operational, customer, and stakeholder performance

We will measure efficiency with KPIs, metrics, dashboards, and operational efficiency ratios. Our goal is an operational efficiency ratio below 50%.

Partner with OGSCapital for Your Bank Business Plan Success

Highly efficient service.

Highly Efficient Service! I am incredibly happy with the outcome; Alex and his team are highly efficient professionals with a diverse bank of knowledge.

Are you looking to hire business plan writers to start a bank business plan? At OGSCapital, we can help you create a customized and high-quality bank development business plan to meet your goals and exceed your expectations.

We have a team of senior business plan experts with extensive experience and expertise in various industries and markets. We will conduct thorough market research, develop a unique value proposition, design a compelling financial model, and craft a persuasive pitch deck for your business plan. We will also offer you strategic advice, guidance, and access to a network of investors and other crucial contacts.

We are not just a business plan writing service. We are a partner and a mentor who will support you throughout your entrepreneurial journey. We will help you achieve your business goals with smart solutions and professional advice. Contact us today and let us help you turn your business idea into a reality.

Frequently Asked Questions

How do I start a small bank business?

To start a small bank business in the US, you need to raise enough capital, understand how to make a business plan for the bank, apply for a federal or state charter, register your bank for taxes, open a business bank account, set up accounting, get the necessary permits and licenses, get bank insurance, define your brand, create your website, and set up your phone system.

Are banks profitable businesses?

Yes, banks are profitable businesses in the US. They earn money through interest on loans and fees for other services. The commercial banking industry in the US has grown 5.6% per year on average between 2018 and 2023.

Download Bank Business Plan Sample in pdf

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

Add comment

E-mail is already registered on the site. Please use the Login form or enter another .

You entered an incorrect username or password

Comments (0)

mentioned in the press:

Search the site:

OGScapital website is not supported for your current browser. Please use:

• Credit cards
• View all credit cards
• Banking guide
• Loans guide
• Insurance guide
• Personal finance
• View all personal finance
• Small business
• Small business guide
• View all taxes

You’re our first priority. Every time.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners .

How to Get Student Loan Forgiveness in 2024

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

Student loan forgiveness has a mixed track record. Last summer, the Supreme Court struck down a broad plan that would’ve erased up to $20,000 per borrower. Still, student loan forgiveness is more accessible now than ever before. A handful of existing federal student loan forgiveness programs have erased $143.6 billion in student debt for 3.96 million borrowers as of March 21, according to the Education Department, with more to come this year.

The White House is currently trying to push through a narrower forgiveness ‘Plan B’ version of its failed broad forgiveness plan. The proven paths to forgiveness, however, include programs that range from income-driven repayment (IDR) plans — which cap monthly bills at a percentage of your income and forgive your remaining balance after 10 to 25 years — to niche programs for borrowers with certain loan types, jobs or school circumstances.

Here’s how to get student loan forgiveness in 2024 — and what you need to know before pursuing this path.

Check your eligibility

You must have federal student loans to qualify for a forgiveness program. Private student loans aren’t eligible.

To verify you have federal loans, go to StudentAid.gov , and try to log in or recover your account.

Next, check which types of federal student loans you have. If you have certain types of loans, like commercially held FFELP or Perkins loans, you may have to consolidate them before going after forgiveness .

Income-driven repayment

The newest IDR plan — Saving on a Valuable Education, or SAVE — is the most accessible path to forgiveness. All borrowers with federal direct loans are eligible to enroll.

The SAVE plan forgives remaining student debt in as little as 10 years if you have an original balance of $12,000 or less, and in up to 20 or 25 years for other borrowers. While working toward forgiveness, your monthly bills could be $0 per month if you earn less than $32,800 as an individual or $67,500 as a family of four; otherwise, they’ll be capped at 5%-10% of your income.

Public Service Loan Forgiveness

If you work for a qualifying government or nonprofit employer, you could be eligible for Public Service Loan Forgiveness (PSLF) . This program erases your remaining balance after a decade of repayment.

“Generally, the PSLF program is the best one if you have access to it,” says Scott Stark, a financial coach and certified financial planner at Financial Finesse, a workplace financial wellness company.

Other forgiveness programs

Outside of IDR and PSLF, your student loan forgiveness options may include:

Teacher Loan Forgiveness , if you work in a qualifying low-income school. 

Borrower defense to repayment , if you think your school defrauded you. 

Closed school discharge , if your school closed during or shortly after your time there.

Perkins loan cancellation , if you have Perkins loans and work in public service.  

State-based student loan payment assistance , if you work in health care or are willing to relocate to a new area. 

Do the math

Use the Education Department’s loan simulator to see how much debt you could get erased under various forgiveness programs and repayment plans, how much your monthly payments could be and how long you’ll be in repayment.

If an IDR plan will result in you paying more interest for a longer period or paying off your debt before getting forgiveness, then it may not be a good choice for you. (Public Service Loan Forgiveness also requires enrollment in an IDR plan.)

“It really is a case-by-case kind of thing, but generally speaking, for people whose income is relatively high compared to their student debt loads, the income-driven repayment plans can be pretty unattractive,” says Tisa Silver Canady, founder of the Maryland Center for Collegiate Financial Wellness. “It might behoove them to just stay on a balance-driven plan and pay extra when they feel it makes sense.” Making extra payments toward the principal while on a balance-driven plan — like the standard 10-year plan , which splits your loan into 120 payments — allows you to shrink your debt faster and reduce total interest costs.

On the other hand, if the math for IDR works out such that borrowers can have smaller payments and keep more of their money to reach other financial goals, pursuing forgiveness is a good option, Stark says.

Prepare for a future tax bomb

IDR student loan forgiveness is exempt from federal taxes through 2025. After that, any amount forgiven could result in a student loan tax bomb . A small number of states tax IDR forgiveness, too.

It’s important to plan for a tax bomb if your forgiveness timeline will extend past 2025. Put a small amount of money aside each month to cover your future tax bill, Stark says.

Use the loan simulator to determine how much forgiveness you could ultimately receive: Your taxable income will increase by that amount in the year you get forgiveness. In some cases, the forgiveness could push you into a higher tax bracket, which could further increase your tax burden. If the amount you have to set aside each month to cover the tax bill is larger than the amount you’d save on the IDR plan, it might not be worth it.

Loan balances forgiven through PSLF, Teacher Loan Forgiveness, borrower defense to repayment, closed school discharge and Perkins loan cancellation are exempt from federal taxation.

Change your repayment plan

If you decide IDR forgiveness is the right choice, you must switch to an IDR plan like SAVE.

To sign up for an IDR plan, submit an online application at StudentAid.gov/IDR or call your student loan servicer.

You must also sign up for an IDR plan if you’re striving for PSLF. Choose the plan that gives you the smallest monthly bill to maximize the amount you could get forgiven after 10 years. It’s a good idea to submit your PSLF employer verification form each year to stay on track for forgiveness, Canady says. You can do this through the Education Department’s online PSLF Help Tool .

On a similar note...

• Best Extended Auto Warranty
• Best Used Car Warranty
• Best Car Warranty Companies
• CarShield Reviews
• Best Auto Loan Rates
• Average Auto Loan Interest Rates
• Best Auto Refinance Rates
• Bad Credit Auto Loans
• Best Auto Shipping Companies
• How To Ship a Car
• Car Shipping Cost Calculator
• Montway Auto Transport Reviews
• Best Car Buying Apps
• Best Websites To Sell Your Car Online
• CarMax Review
• Carvana Reviews
• Best LLC Service
• Best Registered Agent Service
• Best Trademark Service
• Best Online Legal Services
• Best CRMs for Small Business
• Best CRM Software
• Best CRM for Real Estate
• Best Marketing CRM
• Best CRM for Sales
• Best Payroll Services
• Best HR Software
• Best HR Outsourcing Services
• Best HRIS Software
• Best Performance Management Software
• Best Personal Loans
• Best Fast Personal Loans
• Best Debt Consolidation Loans
• Best Personal Loans for Bad Credit
• Best Home Equity Loan Rates
• Best Home Equity Loans
• What Is a HELOC?
• HELOC vs. Home Equity Loan
• Best Free Checking Accounts
• Best High-Yield Savings Accounts
• Bank Account Bonuses
• Checking Accounts
• Savings Accounts
• Money Market Accounts
• Best CD Rates
• Citibank CD Rates
• Synchrony Bank CD Rates
• Chase CD Rates
• Capital One CD Rates
• Best Hearing Aids
• Best OTC Hearing Aids
• Most Affordable Hearing Aids
• Eargo Hearing Aids Review
• Best Medical Alert Systems
• Best Medical Alert Watches
• Best Medical Alert Necklaces
• Are Medical Alert Systems Covered by Insurance?
• Best Online Therapy
• Best Online Therapy Platforms That Take Insurance
• Best Online Psychiatrist Platforms
• BetterHelp Review
• Best Mattress
• Best Mattress for Side Sleepers
• Best Mattress for Back Pain
• Best Adjustable Beds
• Best Home Warranty Companies
• American Home Shield Review
• First American Home Warranty Review
• Best Home Appliance Insurance
• Best Moving Companies
• Best Interstate Moving Companies
• Best Long-Distance Moving Companies
• Cheap Moving Companies
• Best Window Replacement Companies
• Best Gutter Guards
• Gutter Installation Costs
• Best Window Brands
• Best Solar Companies
• Best Solar Panels
• How Much Do Solar Panels Cost?
• Solar Calculator
• Best Car Insurance Companies
• Cheapest Car Insurance Companies
• Best Car Insurance for New Drivers
• Same-day Car Insurance
• Best Pet Insurance
• Pet Insurance Cost
• Cheapest Pet Insurance
• Pet Wellness Plans
• Best Life Insurance
• Best Term Life Insurance
• Best Whole Life Insurance
• Term vs. Whole Life Insurance
• Best Travel Insurance Companies
• Best Homeowners Insurance Companies
• Best Renters Insurance Companies
• Best Motorcycle Insurance

Partner content:  This content was created by a business partner of Dow Jones, independent of the MarketWatch newsroom. Links in this article may result in us earning a commission.  Learn More

How To Open a Business Bank Account: A Step-by-Step Guide

Alyssa is a MarketWatch Guides team editor covering personal finance, insurance and loans.

Rashawn Mitchner is a MarketWatch Guides team editor with over 10 years of experience covering personal finance and insurance topics.

A business bank account can help better manage your business finances, keep your personal and work expenses separate and automate bookkeeping tasks

Key Takeaways

• To open a business bank account, you’ll need your personal contact information, your business name, Employer Identification Number (EIN) or Social Security number (SSN), business formation documents and other relevant information.
• Business bank accounts come with protections not found on personal bank accounts such as limited personal liability protection, security for your clients’ information and increased purchasing power.
• Opening a business bank account can help small-business owners keep their personal and business expenses separate.

If you own a business — or if you have a part-time gig or side hustle — it’s wise to keep your business expenses separate from your personal expenses with a dedicated business bank account. A separate account can simplify bookkeeping, shield you from liability and provide other benefits you won’t find with a personal bank account.

In our step-by-step guide, we at the MarketWatch Guides team will show you how to open a business bank account.

Top Offers of April 16, 2024

You could get over 10 times** the average savings account rate with our featured partners below.

*Annual Percentage Yield

**Accurate as of April 2024, assuming FDIC average savings rate of 0.47% and $2,500 deposit.

Why You Can Trust The MarketWatch Guides Team

Personal banking is a big financial decision, especially with the number of product options and rates available in the market. To help you make the best choices possible, we at the MarketWatch Guides team are dedicated to providing you with a comprehensive view of the best banks, credit unions and financial technology products available in the United States. Our team researched more than 100 of the country’s largest and most prominent financial institutions, collecting information on each provider’s account options, fees, rates and terms.

Learn more about our methodology and editorial guidelines .

Types of Business Bank Accounts

There are three main types of business bank accounts:

Business Checking Accounts

Similar to a personal checking account , a business checking account can function as the hub for your finances. You can use this account to pay expenses, receive deposits and track daily transactions. These accounts typically include checks and a debit card to make purchases and withdrawals.

Business Savings Accounts

Just like a personal savings account , a business savings account offers a place to set aside funds at a higher interest rate than a business checking account. These funds can be used to make large capital expenditures without having to take out a loan or used to pay for unexpected expenses.

Merchant Accounts

A merchant account is required for a business that plans to accept credit cards as a form of payment. With this type of account, an operating agreement is made between you (the merchant), your bank and the credit card processing company.

The agreement spells out the terms and fees for your business to process credit cards, including the annual or monthly fees, plus the transaction fees you’ll pay to the processing company. The merchant account functions as the holding spot for customer funds until the transaction has cleared and can be deposited into your business checking account.

Step-by-Step Process: How To Open a Business Bank Account

If you’re just establishing a new business and are ready to open a business bank account, here’s how to get started:

1. Choose a Bank

First, you’ll need to choose a bank. You’ll want to consider a bank’s size and number of locations. If you anticipate going to a bank frequently to make cash deposits or withdrawals, choosing a bank with a convenient location should be near the top of your list. You should also weigh the type of customer service experience you might find at a larger, national bank vs. a smaller community bank or credit union. For example, if you might need a business line of credit, you might get more personalized service from a smaller bank than a larger institution.

Although some online-only banks offer business bank accounts with lower account fees than brick-and-mortar banks, they may not offer the suite of services you’ll find with a traditional bank. For example, you may not be able to make cash deposits with some online banks, and you may have fewer customer service options. But if you’re just seeking basic business banking services, an online bank could be a good fit.

Also, consider the rates and fees associated with a particular bank. Many banks charge monthly maintenance fees and have minimum deposit and minimum balance requirements. If you’re interested in a business savings account, be sure to find out the interest rate or annual percentage yield (APY) on deposits.

2. Gather the Required Documents

To apply for a business bank account, you’ll typically need to provide certain documentation, which may include:

• Identification: Nearly all financial institutions will require you to show a government-issued personal ID like a driver’s license or passport.
• An SSN if you’re a sole proprietor: You may also be asked for other contact information such as your company address and phone number. If your business does business under another name, known as “doing business as,” or a DBA, you’ll need to provide the documentation.
• Business documentation: You’ll need to provide your business registration certificate and your business license(s).
• Any ownership agreements: If your business is a partnership, like a limited liability partnership, you’ll need a signed and dated partnership agreement or certified evidence of registration.
• Corporate documentation: For corporations, you’ll need to bring your articles of incorporation and corporate bylaws.

3. Meet With a Banker

Many banks offer more than one type of business bank account. Even if you’ve narrowed down the bank you’re interested in, you may want to make an appointment with a bank representative to review the various options. Some bankers may even work with you to waive or reduce any minimum opening deposit requirements as an incentive for opening an account with them.

Benefits of Business Bank Accounts

A business bank account can benefit any type of business, from sole proprietorships to companies with hundreds of employees. A bank account dedicated to your business transactions comes with protections you won’t get from conducting business with your personal bank account.

Protect Your Personal Assets

Having a separate business account can shield your personal assets from any lawsuits against your business. If you mix your personal and business finances in the same account — even if you’ve formed a limited liability company (LLC) for your venture — your personal assets will no longer be protected from lawsuits and you could be held personally liable for any business debts.

Protect Your Personal Information

Business bank accounts can provide a measure of protection against your personal information since you’ll typically use your company’s tax ID number and not your Social Security number to open an account.

Manage Business Expenses for Tax Prep

Many types of small businesses — including sole proprietors, independent contractors and gig workers — are required to file taxes quarterly. By having a business account separate from your personal finances, it’s easier to subtract your business expenses from your business income than it would be if your funds were mixed in with your personal finances.

Establish Business Credit

A business bank account can help you establish business credit, which can be beneficial if you need to apply for loans or other types of financing for your business.

Automate Bookkeeping Tasks

Many business bank accounts can also sync with your bookkeeping software to automate your transactions and streamline tasks like payroll, invoicing and other aspects of managing your company’s cash flow.

Show Your Business Is Legitimate

When it comes to your customers and other parties you conduct business with, a business bank account conveys a level of professionalism that can’t be matched by having someone make a payment to your personal bank account. Having your business name on company checks, credit cards and other financial tools implies to vendors and customers that your company is not a hobby and signals to the IRS that your company is legitimate.

Best Business Bank Accounts

The right business bank account for you will be the one that can satisfy most of your banking needs with fees that fit your budget. The best business bank account will be different for every business owner.

Here are some examples of the top business bank accounts from Capital One and Chase Bank , along with what they offer.

Capital One Business Bank Accounts

Capital One offers a few business checking and savings accounts, all with different features and perks to suit different business needs.

Capital One Basic Checking Account

The Basic Checking account doesn’t earn interest. It comes with a $15 monthly service fee, which is waivable if the average daily balance for the previous 30 or 90 days is $2,000 or more. You’ll also get access to more than 70,000 ATMs without fees, and there are no fees for digital transactions such as online bill payments, mobile deposits or automated clearing house (ACH) payments.

Capital One Enhanced Checking Account

The Enhanced Checking account also doesn’t earn any interest, and it has a $35 monthly service fee which can be waived if the average daily balance for the previous 30 or 90 days is $25,000 or more. This account also comes with no fees for: 

• Incoming domestic wire transfers
• First five outgoing domestic wire transfers each month
• Mobile deposits
• Online bill payments
• ACH payments

Capital One Business Savings Account

The Capital One business savings account has a $3 monthly service fee, but this fee is waived with a $300 minimum balance. You can make up to six free withdrawals per month.

Capital One also guarantees a promotional interest rate to new business bank account holders for the first six months. The promotional rate will vary depending on the account balance. It’ll expire 183 days after the account is opened, after which the standard rate in effect will apply.

Chase Business Bank Accounts

Chase offers several different types of business checking and savings accounts to open .

Chase Business Complete Banking

The Chase Business Complete Banking account has a $15 monthly service fee, which can be waived if you do one of the following:

• Have a $2,000 minimum daily ending balance
• Have $2,000 in eligible deposits from Chase QuickAccept or Chase Payment Solutions transactions
• Make $2,000 total in purchases on a Chase Ink Business Card
• Maintain a linked, eligible Chase Private Client or J.P. Morgan Classic checking account
• Meet the requirements for Chase Military Banking

This account also offers unlimited debit card and Chase ATM transactions and up to $5,000 in cash deposits without fees per statement cycle.

Chase Performance Business Checking

Chase Performance Business Checking has a $30 monthly service fee, which can be waived if you maintain an average beginning day balance of $35,000 or more across qualifying, linked business deposit accounts.

This account also offers 250 transactions per month at no charge, $20,000 in cash deposits without fees per statement cycle, free incoming wire transfers and two outgoing domestic wire transfers without fees per statement cycle.

Chase Platinum Business Checking

Chase Platinum Business Checking has a $95 monthly fee, which can be waived if you meet one of the following:

• Maintain a $100,000 combined average beginning day balance across qualifying, linked accounts
• Maintain a $50,000 combined average beginning day balance with a linked, eligible Chase Private Client or J.P. Morgan Classic checking account

This account also offers 500 transactions at no charge, $25,000 in cash deposits without fees per statement cycle, free incoming wire transfers and your four most expensive outgoing wire transfers at no charge per statement cycle.

Chase Business Total Savings

Chase Business Total Savings has a $10 monthly service fee, which can be waived if you meet one of the following:

• Maintain an average ledger balance of $1,000 or more in this account each statement period
• Link a Chase Business Complete Banking account

Similar to Chase’s personal savings accounts , this account earns a low APY, but it’s not eligible to earn relationship rates. There’s no charge for the first 15 transactions per month (then 40 cents each) and the first $5,000 in cash deposits each month do not carry any additional fees.

Chase Business Premier Savings

The Chase Business Premier Savings account has a $20 monthly service fee, which can be waived with one of the following: 

• Maintain an average ledger balance of $25,000 or more in this account each statement period
• Link an eligible Chase checking account

The first $10,000 in cash deposits per month do not carry any additional fees, and there’s no charge for the first 30 transactions per month (then 40 cents each). This savings account also earns interest , including relationship rates.

Exploring Additional Business Banking Services

Business banking services go beyond checking and savings accounts. Any business that accepts credit cards will require a merchant services account. In most cases, this can be established with the same bank as your business checking account.

Companies seeking access to extra purchasing power can also apply for business loans and lines of credit through their banking institution and many banks also offer payroll solutions. Most larger banks offer their own business credit cards and may include additional incentives for applying for a card through them.

Although one-stop shopping for all your business banking needs may be convenient, you may find better fees and offers by shopping around and using more than one bank for different services. For example, you may choose to get a business checking account from one bank and a business credit card from another bank.

FAQ: How To Open a Business Bank Account

How do i open an account for a business.

Once you’ve determined what type of business bank account you want and where you want to open an account, call the bank and ask to make an appointment with a client services manager. They will let you know the exact documentation required to set up and establish your account.

At a minimum, you’ll typically need to provide your EIN or SSN, personal identification, business registration certificate and business license. Many banks will also allow you to apply online, which will require making an electronic deposit to open your account as well as providing the required documentation.

What is the minimum balance required to maintain my business bank account?

Each bank has its own minimum balance requirements for each type of business account. Check with the bank you’re interested in to see its requirements by account type.

What are some of the benefits of opening a business bank account?

One of the biggest benefits of opening a business bank account is that it can simplify tax prep by keeping your business and work expenses separate. This can also help shield your personal accounts from any liabilities incurred by your business.

Other benefits include the ability to streamline bookkeeping functions like accounting and payroll. You may also be able to receive better rates and fees on various services such as loans, credit cards or other deposit accounts.

*Data accurate at time of publication

Related Articles

7 more states sue to block Biden's student loan handout plan as lawsuits pile up

P resident Biden's administration faces yet another lawsuit as a growing number of states seek to block his student loan handout plan, with Missouri and six other states filing a complaint on Tuesday.

Missouri Attorney General Andrew Bailey's lawsuit argues that Biden's "SAVE" plan, announced in February, is illegal and would cost American taxpayers $475 billion. Bailey's lawsuit comes just weeks after Kansas and 10 other states sued the Biden administration over the same plan.

"With the stroke of his pen, Joe Biden is attempting to saddle working Missourians with a half trillion dollars in debt. The United States Constitution makes clear that the President lacks the authority to unilaterally ‘cancel’ student loan debt for millions of Americans without express permission from Congress," Bailey told Fox News Digital.

"The President does not get to thwart the Constitution when it suits his political agenda. I’m filing suit to halt his embarrassing attempt to buy the 2024 election in direct violation of the law. The Constitution will continue to mean something as long as I’m Attorney General."

MORE STUDENT LOAN FORGIVENESS IS ON THE HORIZON, AS U.S. COLLEGES COMMIT TO COST TRANSPARENCY

Joining Bailey in the lawsuit are the attorneys general of Arkansas, Florida, Georgia, Ohio, Oklahoma and North Dakota.

READ ON THE FOX BUSINESS APP

Missouri and Arkansas both participated in the lawsuit that ultimately brought an end to Biden's previous student loan plan last year. The Supreme Court decided 6-3 that Biden's plan was unconstitutional.

BIDEN SANCTIONS ISRAELI SETTLERS IN WEST BANK AFTER SHOOTING OF US TEEN

"President Biden has already lost on this question once, and he is refusing to follow the law. The Supreme Court could not have been clearer: President Biden cannot unilaterally cancel student debt and force taxpayers to bear the multi-billion-dollar cost," Arkansas AG Tim Griffin told Fox News Digital.

The lawsuit argues that Biden's SAVE plan is part of "a long but troubling pattern of the President relying on innocuous language from decades-old statutes to impose drastic, costly policy changes on the American people without their consent."

The White House did not immediately respond to a request for comment from Fox News Digital, but the Biden administration previously defended the SAVE program against the lawsuit led by Kansas.

"The Department does not comment on pending litigation. However, Congress gave the U.S. Department of Education the authority to define the terms of income-driven repayment plans in 1993, and the SAVE plan is the fourth time the Department has used that authority," an Education Department spokesperson said at the time. "The Biden-Harris Administration won’t stop fighting to provide support and relief to borrowers across the country – no matter how many times Republican elected officials try to stop us."

SOME STUDENT LOAN BORROWERS ARE GETTING REFUNDS ON TOP OF LOAN FORGIVENESS

Tuesday's lawsuit lands just one day after Biden announced yet another plan to cancel student loan debt. This latest one focuses on cutting loans that have exceeded their principal amount due to interest. It would cut up to $20,000 in accrued interest for borrowers, but borrowers who make less than $120,000 or couples who make less than $240,000 would be allowed to cut all of their accrued interest beyond the principal amount.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

The result would see roughly 23 million Americans having their loans cut down to the principal amount.

Bailey's and Griffin's offices did not immediately say whether they had plans to challenge the newest plan.

Read the full Missouri lawsuit below:

Original article source: 7 more states sue to block Biden's student loan handout plan as lawsuits pile up

Small Business Trends

How to start a food truck business.

If you buy something through our links, we may earn money from our affiliate partners. Learn more .

If you’re interested in starting a food service business but don’t want to spend the time and money to set up a dedicated location, a food truck may be the way to go. Here’s a guide on how to start a food truck business to help aspiring food truck owners get started.

How to Start a Food Truck Business in 21 Simple Steps

Every food truck may look and operate a bit differently. Here are some common steps you can use to get started.

• Read More: Food Truck Business Plan

1. Research Food Trucks Locally

If you want to be a successful food truck owner, you need to understand your competition. Identify what cuisines are popular and what’s missing in the market. Research other food trucks in your area to find a unique niche and learn the hot spots and trends in your local food truck scene. Consider attending local food truck events to gather insights.

2. Choose a Niche and Know Your Target Market

Food truck customers often like unique menu items. Analyze demographic data to better understand customer preferences. Find something that sets your business apart, like interesting toppings on classics like burgers and tacos. Develop a menu that caters to local tastes and dietary preferences.

3. Name and Brand Your Business

A catchy name and brand will make your business more memorable. Ensure your brand reflects the culinary experience you offer. Choose consistent design elements that are easy to read and communicate a style that appeals to your target customers. Your brand should align well with the vibe of your food truck.

A catchy name and brand will make your business more memorable. Choose consistent design elements that are easy to read and communicate a style that appeals to your target customers.

4. Write a Food Truck Business Plan

Every business needs a plan; here are some things to include in your food truck business plan:

• Market analysis: Look at other food truck owners in your area and consider demand from local customers.
• Product and service list: What types of food will you offer? Consider ingredient cost and what you’ll charge for items; include any extra revenue streams like private catering.
• Marketing strategies: How will you market your business? And what expenses might come with your strategy?
• Financial projections: Based on your market and price list, what can you expect to earn? How does that compare to your projected expenses?

5. Look into Small Business Grants

Food truck owners may benefit from extra funds. Research local business development programs offering financial assistance. Look for available grants for new businesses in your area for extra support. Explore industry-specific grants, particularly those focused on culinary enterprises.

6. Develop a Menu and Set Your Prices

Within your niche, create a short list of items you can make with limited ingredients. Incorporate seasonal specialties to attract customers. Price items based on demand and costs. Consider the local economic landscape to set competitive and profitable prices.

7. Secure a Truck

You need a truck that’s large enough to prepare and serve food. Assess the layout for efficient food preparation and customer service. So, you have to find where to buy a food truck . You can find old vans or trucks in local classified ads and have them furbished with equipment. Evaluate the condition and potential modifications needed. Or buy an existing food truck from a business broker. You can also seek expert advice to make a cost-effective decision.

Read More: food truck ideas

8. Form a Legal Entity and Register Your Business

All businesses need a legal entity; here are some for food truck operators to consider:

• Sole proprietor: This can work for those who operate individually, but it offers no liability protection.
• LLC: Offers liability and low startup costs; this is quite common for food truck operations.
• Corporation: This offers liability protection and a different tax structure, but can be more complicated and costly to start.

9. Open a Business Bank Account

Keep your business and personal assets separate to simplify bookkeeping and build credit. Consider business credit cards for monthly purchases.

10. Get Business Insurance

Insurance can protect your assets if your business experiences any losses. Here are some common types for a mobile food business.

• General liability
• Commercial auto
• Workers comp
• Property coverage
• Read More: food truck name ideas

11. Get the Necessary Food Truck Equipment

The exact equipment needed depends on your niche and how much food you work with, but here are some common categories:

• Cooking equipment like a griddle or fryers
• Refrigeration equipment
• Shelves or cabinets to store ingredients
• Food containers
• Cleaning supplies

12. Get a POS System

A point of sale system helps successful food trucks manage transactions. Common options include TouchBistro, Toast, and Square .

13. Source Your Ingredients

Find wholesale suppliers for all the items you need to create your menu. These are often the same food industry suppliers that work with restaurants with a brick and mortar location.

14. Apply for Permits and Food Truck Licenses

Food trucks often need business licenses, vehicle registration and commercial driver’s license, parking permits for specific locations, and mobile food service permits. Check with your local health department to see what paperwork is required.

15. Prepare for Health Inspectors to Visit

Local officials will also likely visit to check for cleanliness and food safety.

• Read More: food truck festival

16. Sort Out Your Taxes

Taxes vary by state. But many food truck owners must pay:

• Business income taxes
• Payroll taxes
• State sales taxes

17. Create a Website and Market Your Business

Customers often research their local food truck community online. So create an online presence with your menu and social profiles to update your locations.

18. Decide Where to Park

Food truck vendors should seek out spots with lots of customers, like high foot traffic areas and special events. Make sure parking spots are approved through your local motor vehicle department.

19. Employ Staff

You may need a small team to make food and serve customers. Apply for a NIE number and meet other requirements of your state before interviewing and training.

20. Maintain Your Truck

Your food truck needs oil changes, tire rotations, and fluid flushes just like any vehicle.

21. Market Your Business and Expand

To bring in more customers, promote your brand on social media accounts, update your location on food truck finder apps, and set up at popular food truck festivals. Once you gain popularity, create a franchise to market your tasty food in new locations.

• Read More: food truck finder

Why You Should be Part of the Food Truck Industry

Food trucks offer plenty of exciting opportunities for entrepreneurs. Here are some benefits of choosing this niche:

• Location independence: Your truck can go wherever potential customers are. If there’s a big event or area with lots of foot traffic on any given night, you can set up there to reach more people.
• Low startup costs: You don’t need a dedicated location or a huge team to run a food truck. So it can be easier to break into the industry.
• Built-in advertising: When you set up at an event or drive across town, your truck gets seen. If you have a catchy logo or design, this automatically helps you build brand recognition without extra advertising.
• Multiple income streams: Food trucks don’t have to only offer food at festivals and high-traffic areas. You can also offer catering to diversify your income streams.

How Much Does it Cost to Start a Food Truck Business?

The cost of starting a food truck business can vary significantly based on numerous factors. In the United States, you can generally expect to spend from $28,000 to $180,000, with an average cost hovering around $100,000. This variation in cost is influenced by factors such as location, local licensing requirements, kitchen setup, and cooking equipment. The type of truck you choose plays a significant role in the overall cost. Options include:

• New Truck with a New Kitchen Setup : An all-new setup can cost between $120,000 to $200,000. This option is free from maintenance or hidden costs initially.
• Used Truck with a New Kitchen Setup : Opting for this setup could range from $80,000 to $115,000. While the initial cost is lower, a used truck may require more maintenance and repairs over time.
• Used Truck with a Used Kitchen Setup : This is the most cost-effective option, with costs ranging from $55,000 to $90,000. However, it comes with the risk of higher maintenance and repair costs.
• Renting a Food Truck : If you’re starting on a tight budget, renting a food truck is a viable option, generally costing $2,000 to $4,000 a month.

Additional expenses to consider include kitchen equipment and supplies (estimated at $10,000 to $25,000), inventory and food costs (around $1,000 to $3,000 initially), marketing and advertising expenses, professional service fees (legal, accounting, etc.), employee salaries and benefits, maintenance and fuel costs, commissary or storage fees, point-of-sale system and payment processing fees.

Moreover, mobile app development for enhanced branding and customer engagement can start at $5,000, with more complex apps costing upwards of $20,000. Accounting software like QuickBooks or Xero can add monthly costs of $20 to $60. Efficient inventory management is crucial, including costs for food ingredients, disposable supplies, cleaning supplies, fuel, propane, menu specials, and beverages. Marketing and branding efforts can also significantly impact your startup costs, with expenses for website development, advertising, branding materials, promotions, events, and food truck wrapping.

Securing the necessary licenses and permits is a must for legal operation. These include food service licenses, mobile food vendor permits, health department permits, fire department permits, parking permits, business licenses, sales tax permits, and commissary agreements. Utility costs such as electricity, water, and waste disposal also add to the operational expenses.

Finally, consider the cost of labor and talent required to run the food truck, including chefs, servers, and cleaners. Overall, a detailed budget and a robust business plan are crucial for a successful launch and sustainable operation of a food truck business

Is Owning a Food Truck Profitable?

Yes, starting your own food truck can be profitable. Many food trucks make over $100,000 per year. Once startup costs and ongoing expenses are factored in, an annual profit of about $50,000 is usually possible. However, the exact amount you earn depends on your food truck concept, operating hours, menu, and locations. You can also look into food truck franchise options to cut your initial startup cost.

Image: Depositphotos, Envato Elements

Very informative content. Thanks for sharing

Your email address will not be published. Required fields are marked *

© Copyright 2003 - 2024, Small Business Trends LLC. All rights reserved. "Small Business Trends" is a registered trademark.