Most entrepreneurs fund their own business through the start-up stages but, when they eventually exhaust their initial personal resources, they eventually tend to either want or need to tap into other funding sources to enable their business to continue to survive and grow. When companies get external capital, until such time as the business entity is sufficiently mature and cash generative to be funded in its own right, it usually takes the form of debt that is personally borrowed or guaranteed. Whilst the proceeds of such a loan often help accelerate business growth, this comes with significant risk for the business owner. They will end up with debt that they are personally responsible for repaying, whether or not the business ultimately proves to be a success. If the debt is secured, then the entrepreneur must forfeit the collateral.
Given that the stakes are so high for the business owner, it is critical that they have a solid, well-researched business plan that meets the SBA loan requirements as well as banks’ highest standards. A business plan written for a bank loan differs from other types of business plan by its focus on the financial aspects, such as the specific use of the loan proceeds, important financial ratios such as your debt to asset ratio, debt to service ratio and interest coverage ratio and the potential return on investment (ROI).
Even if you are one of the few small business owners that have an up to date, written strategic business plan, it is unlikely this document will meet the specific requirements for SBA loans or will give the banks’ underwriters all of the information for which they are looking. There is a reason why only roughly one in four small business loan applications are approved by the major banks and it is usually because small business owners aren't able to articulate their vision for the future and or how they're going to use the capital that they're looking for to bring that vision into reality.
There’s a simple way to avoid leaving money on the table: get a business plan written by Continuous Business Planning. We are small business planning experts, having written hundreds of business plans that have been used to raise tens of millions of pounds in debt financing. Unlike most business planning consultants, we realise that no one person has all the relevant experience or skills to create the most complete and appropriate plan possible. Instead, our team of experienced entrepreneurs will collaborate to produce exactly what you need, with your project manager sourcing the right input from the right people over the course of as little as a week.
If you’ve already been through an SBA Loan Calculator or bank’s business loan calculator and want to move to the next step, Call us or send us a message today to move one step closer to obtaining the insight and the finance that will take your small business to the next level.