business plan proposal for bank loan

This website uses cookies to enhance the user experience.

Like this content? Sign up to receive more!

Subscribe for tips and guidance to help you grow a better, smarter business.

We care about your privacy. See our Privacy Policy .

🎧 Real entrepreneurs. Real stories.

Subscribe to The Hurdle podcast

You can do this! Tour LivePlan to see how simple business planning can be.

Have an expert write your plan, build your forecast, and so much more.

Integrations

For Small Businesses

For Advisors & Mentors

Running a Business

How To Create a Business Plan for a Bank Loan [4 Key Steps]

8 min. read

Updated September 23, 2024

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

You’re not alone.

Aside from your loan application, your business plan is the main supporting document to help you get a business loan . Getting all the details just 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 ensure that your business plan is accurate and convincing.

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

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 and your solution

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

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.

If you’re just starting, we recommend actually going out and talking with your customers first. That way, you can prove you’re solving a real problem for your intended audience.

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.” You need to break down the total market into a realistic number of sales based on your business’s capabilities.

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 other products or services?

Do you think you have no competition? Think again. Your customers are likely turning to an indirect competitor who 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.

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 and 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. 

Here are a few examples of what to include:

• • 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: The price you charge must reflect consumer demand. There are several pricing 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 how much space you have available. 

Plan to work at home? You can also cover your office space, how this positively impacts your expenses, and if you have any plans to move outside your house.

If you use any specialized software, equipment, or tools be sure to mention them here as well.

Milestones and 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.

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 your financial performance and financial forecasts to determine how likely your business is to succeed.

Ideally, you’re already tracking your finances and have at least dabbled with forecasting. However, if you’re starting from scratch, break your financial planning into the following smaller pieces:

Simply put, these are 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:

• • Sales forecast : List all your products, services, and any other ways your business will generate revenue. If you have direct costs, or expenses required to make what you sell, consider adding them as a percentage of your revenue.
• • Personnel forecast : Salaries and expenses related to what you pay yourself, employees, and any contractors.
• • Expense forecast : Things like rent, utilities, marketing costs, and any other regular expenses.

How much and 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. 

Explain where the money will go, and if possible, create a forecast scenario showing the use and repayment of the loan. Also detail where all your financing is coming from. Lines of credit, loans, or personal savings should be listed here alongside the loan you’re applying for.

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.
• • Balance Sheet : This is likely the first thing a loan officer will look at. It covers your liability, capital, and assets and provides an overview of your business's financial soundness.
• • Cash Flow Statement : Essentially, this statement tracks how much money you have in the bank at any given point. Loan officers will likely expect realistic monthly cash flow for at least 12 months.

4. Summarize your business information

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

It’s an introduction to your company and summarizes the main points of your plan. While lenders will need to review your full business plan, they may use the executive summary as a quick way to determine whether your business is worth their time.

It may be your only chance to get the lender excited about your business. So, keep it to just one or two pages and be as clear and concise as possible. 

What to check before submitting your business plan to the bank

Before you finish your loan application and send in all your paperwork, be sure to review the following in your business plan:

• 1. Did you complete every section? Business plans have a fairly standard outline that lenders expect to see. It might sound simple, but make sure that you don't leave a section blank by mistake. If you want to verify that everything is correct, consider using a business plan builder that uses an investor-approved outline.
• 2. Have you completed your full financial plan? Having detailed financials is expected. Your historical performance and financial forecasts tell the story of your growth path through numbers. Be sure that all of your financial documents are included and accurate. To go above and beyond, be sure to include the assumptions behind your financials and any financial scenarios you’ve been exploring.
• 3. Is your plan concise? No one has time to read a 50-page business plan, and you probably don’t want to write one. Keep every section of your business plan to-the-point, and be sure to populate your executive summary. If something should be included but adds unnecessary complexity to your plan, go ahead and add it to your appendix.
• 4. Did you pay attention to spelling, grammar, and punctuation? Small things really do make a difference, so dot those i’s and cross those t’s. If you can, have someone else review your business plan to catch any errors you may have missed. For another review, consider using an AI business plan generator to check your grammar and even rewrite sections to sound more professional.
• 5. Is your plan realistic? Make sure your calculations, goals, and predictions are practical, and that you back-up your plan with good market research. Also, double-check that sections of your business plan don’t contradict one another.

If you need help writing your plan

Getting a business loan isn’t easy. According to Federal Reserve Data , only 31% of businesses receive the total amount of financing they request.

Having a well-written business plan for your bank loan can go a long way toward you being among the businesses that do get the funding they ask for.

Not everyone feels confident writing a business plan themselves, especially if it’s needed to secure a bank loan. While 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 a few options to consider:

• 1. Download a free business plan template : Start with an expert-designed template formatted to meet lender expectations.
• 1. Check out our guide on writing a detailed business plan : Dig deeper into what to include in every section of your business plan.
• 1. 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.
• 1. Sign up for LivePlan: It's business planning software that provides 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.

Like this post? Share with a friend!

Kody currently works as the Inbound and Content Marketing Specialist at Palo Alto Software and runs editorial for both LivePlan and Bplans, working with various freelance specialists and in-house writers. A graduate of the University of Oregon, he specializes in SEO research, content writing, and branding.

Table of Contents

Related articles.

Diane Gilleland

November 21, 2022

How to Manage Business Loans After You Receive Funding

Noah Parsons

June 26, 2024

How to Get a Startup Business Loan With No Money

Elon Glucklich

June 25, 2024

Using AI to Get a Bank Loan? Read This First

Caroline Cummings

October 14, 2024

How to Pitch an Idea to Investors With Confidence and Get Funded

• 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 Write a Successful Business Plan for a Loan

Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. 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 .

Table of Contents

What does a loan business plan include?

What lenders look for in a business plan, business plan for loan examples, resources for writing a business plan.

A comprehensive and well-written business plan can be used to persuade lenders that your business is worth investing in and hopefully, improve your chances of getting approved for a small-business loan . Many lenders will ask that you include a business plan along with other documents as part of your loan application.

When writing a business plan for a loan, you’ll want to highlight your abilities, justify your need for capital and prove your ability to repay the debt. 

Here’s everything you need to know to get started.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

A successful business plan for a loan describes your financial goals and how you’ll achieve them. Although business plan components can vary from company to company, there are a few sections that are typically included in most plans.

These sections will help provide lenders with an overview of your business and explain why they should approve you for a loan.  

Executive summary

The executive summary is used to spark interest in your business. It may include high-level information about you, your products and services, your management team, employees, business location and financial details. Your mission statement can be added here as well.

To help build a lender’s confidence in your business, you can also include a concise overview of your growth plans in this section.

Company overview

The company overview is an area to describe the strengths of your business. If you didn’t explain what problems your business will solve in the executive summary, do it here. 

Highlight any experts on your team and what gives you a competitive advantage. You can also include specific details about your business such as when it was founded, your business entity type and history.

Products and services

Use this section to demonstrate the need for what you’re offering. Describe your products and services and explain how customers will benefit from having them. 

Detail any equipment or materials that you need to provide your goods and services — this may be particularly helpful if you’re looking for equipment or inventory financing . You’ll also want to disclose any patents or copyrights in this section.

Market analysis

Here you can demonstrate that you’ve done your homework and showcase your understanding of your industry, current outlook, trends, target market and competitors.

You can add details about your target market that include where you’ll find customers, ways you plan to market to them and how your products and services will be delivered to them.

» MORE: How to write a market analysis for a business plan

Marketing and sales plan

Your marketing and sales plan provides details on how you intend to attract your customers and build a client base. You can also explain the steps involved in the sale and delivery of your product or service.

At a high level, this section should identify your sales goals and how you plan to achieve them — showing a lender how you’re going to make money to repay potential debt.

Operational plan

The operational plan section covers the physical requirements of operating your business on a day-to-day basis. Depending on your type of business, this may include location, facility requirements, equipment, vehicles, inventory needs and supplies. Production goals, timelines, quality control and customer service details may also be included.

Management team

This section illustrates how your business will be organized. You can list the management team, owners, board of directors and consultants with details about their experience and the role they will play at your company. This is also a good place to include an organizational chart .

From this section, a lender should understand why you and your team are qualified to run a business and why they should feel confident lending you money — even if you’re a startup.

Funding request

In this section, you’ll explain the amount of money you’re requesting from the lender and why you need it. You’ll describe how the funds will be used and how you intend to repay the loan.

You may also discuss any funding requirements you anticipate over the next five years and your strategic financial plans for the future.

» Need help writing? Learn about the best business plan software .

Financial statements

When you’re writing a business plan for a loan, this is one of the most important sections. The goal is to use your financial statements to prove to a lender that your business is stable and will be able to repay any potential debt. 

In this section, you’ll want to include three to five years of income statements, cash flow statements and balance sheets. It can also be helpful to include an expense analysis, break-even analysis, capital expenditure budgets, projected income statements and projected cash flow statements. If you have collateral that you could put up to secure a loan, you should list it in this section as well.

If you’re a startup that doesn’t have much historical data to provide, you’ll want to include estimated costs, revenue and any other future projections you may have. Graphs and charts can be useful visual aids here.

In general, the more data you can use to show a lender your financial security, the better.

Finally, if necessary, supporting information and documents can be added in an appendix section. This may include credit histories, resumes, letters of reference, product pictures, licenses, permits, contracts and other legal documents.

Lenders will typically evaluate your loan application based on the five C’s — or characteristics — of credit : character, capacity, capital, conditions and collateral. Although your business plan won't contain everything a lender needs to complete its assessment, the document can highlight your strengths in each of these areas.

A lender will assess your character by reviewing your education, business experience and credit history. This assessment may also be extended to board members and your management team. Highlights of your strengths can be worked into the following sections of your business plan:

Executive summary.

Company overview.

Management team.

Capacity centers on your ability to repay the loan. Lenders will be looking at the revenue you plan to generate, your expenses, cash flow and your loan payment plan. This information can be included in the following sections:

Funding request.

Financial statements.

Capital is the amount of money you have invested in your business. Lenders can use it to judge your financial commitment to the business. You can use any of the following sections to highlight your financial commitment:

Operational plan.

Conditions refers to the purpose and market for your products and services. Lenders will be looking for information such as product demand, competition and industry trends. Information for this can be included in the following sections:

Market analysis.

Products and services.

Marketing and sales plan.

Collateral is an asset pledged to a lender to guarantee the repayment of a loan. This can be equipment, inventory, vehicles or something else of value. Use the following sections to include information on assets:

» MORE: How to get a business loan

Writing a business plan for a loan application can be intimidating, especially when you’re just getting started. It may be helpful to use a business plan template or refer to an existing sample as you’re going through the draft process.

Here are a few examples that you may find useful:

Business Plan Outline — Colorado Small Business Development Center

Business Plan Template — Iowa Small Business Development Center

Writing a Business Plan — Maine Small Business Development Center

Business Plan Workbook — Capital One

U.S. Small Business Administration. The SBA offers a free self-paced course on writing a business plan. The course includes several videos, objectives for you to accomplish, as well as worksheets you can complete.

SCORE. SCORE, a nonprofit organization and resource partner of the SBA, offers free assistance that includes a step-by-step downloadable template to help startups create a business plan, and mentors who can review and refine your plan virtually or in person.

Small Business Development Centers. Similarly, your local SBDC can provide assistance with business planning and finding access to capital. These organizations also have virtual and in-person training courses, as well as opportunities to consult with business experts.

Business plan software. Although many business plan software platforms require a subscription, these tools can be useful if you want a templated approach that can break the process down for you step-by-step. Many of these services include a range of examples and templates, instruction videos and guides, and financial dashboards, among other features. You may also be able to use a free trial before committing to one of these software options.

A loan business plan outlines your business’s objectives, products or services, funding needs and finances. The goal of this document is to convince lenders that they should approve you for a business loan.

Not all lenders will require a business plan, but you’ll likely need one for bank and SBA loans. Even if it isn’t required, however, a lean business plan can be used to bolster your loan application.

Lenders ask for a business plan because they want to know that your business is and will continue to be financially stable. They want to know how you make money, spend money and plan to achieve your financial goals. All of this information allows them to assess whether you’ll be able to repay a loan and decide if they should approve your application.

On a similar note...

New elevated offer

American Express® Business Gold Card

Rates and Fees

on American Express' website