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How to write a business plan for lenders

The ability to get a loan is an important part of running a business. You need to have financing and funding to help expand, run day to day operations, and keep a business going from time to time. However, a poorly written business plan, can shoot down your chances of funding, and leave you with few options. Here's what a good business plan should include:

1. Explain what your business is and what you do. You can't assume that lenders know what it is that you do based on your name. A short, but clear, description of what your business entails is needed. Do your best to explain it in two sentences.
2. Include who the owners are, and why they are qualified. Who will run things, and what sets them apart. You want to specify who it is that owns the company and why they are qualified to own a company in your industry. You also want to specify who will run the day to day operations, and how they are qualified. It is good to include a short bio on each person. It is also important to show how much ownership (if any) they have in the company.
3. Include information about past earnings, future earnings, collateral, and personal contributions. If you are a start up, you may need to create a pro forma or some sort of prediction for future earnings. If you are an existing business, be sure to include past financials. You also want to cover what collateral the company has by way of equipment, vehicles, real estate, etc. as well as any personal money invested in the business.
4. Outline why you need the money and how it will be used. A lender will want to know why you feel a loan is necessary, and they want to know the number you provide is not arbitrary, but that you have valid reasons for the amount, and the planed use of it.
5. Show that you know the market as well as your target market. It is good to indicate the relative size of the market you are in, the market as a whole's earnings, and who your target consumers are. This requires some market research to be done.
6. Show that you know your competition. There is always competition, so point out who they are, and what their strengths and weaknesses are. Knowing your competition is how you gain parts of their market share. If you do not know them, you can't best them.
7. Show that you know yourself. Outline your own strengths and weaknesses, as well as any plans to help maximize your strengths, and minimize your weaknesses. Be specific, be honest, but be sure to put yourself in a good light. You may be a small company, for example, but that means more personalized service. Highlight your competitive advantages, and how they set you apart, or will set you apart in the market.
8. Show a complete understanding of financials. How much will you spend on advertising, maintenance, retail space, equipment, supplies, utilities, etc.? Lenders want to know that you have a financial plan in place.

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