4 Ways a Bank Business Plan Differs from Other Types of Business Plans

If your business is in need of finances and you have already made a decision to apply for a bank loan, there are a few things to keep in mind when writing your Bank Business Plan. Getting a bank's approval for a loan is a different process than getting funding from investors. Each business plan can vary, depending on its purpose, and its contents should be written accordingly. 

Prepare for your audience

First thing's first, know your audience. This is the most basic difference between many types of business plans, whether they are a bank business plan, investor or immigration. Depending on who will be reading it changes how it will be formulated.

• Banks want to see if your debt will be repaid, they are only interested in your numbers, facts and hard data, no matter the business type.

• But when pitching to investors, try to show your company's potential. You also might want to check the investor's background first. They may only invest in certain types of business.

• Immigration plans are intended for immigration officers who check if the business meets the visa application standards. They are looking to see if your business will have taxable profit and possible job creations. 
  

Cash flow - stability vs growth

 

Financial projections are an integral part of any business plan, but pay close attention to how you’re presenting your numbers. While investors are interested in a return on their investment (ROI) and company's potential and predictions for future growth, banks want to see if you are operating a steady business. You need to prove you can maintain a high enough revenue to be able to repay your debt.

That is why a Bank Business Plan requires your company's financial statements, further back and in greater detail than in other types of business plans. Therefore, you can have more modest numbers when applying for a bank loan compared to looking for fundings from investors. For this reason, it is difficult for early-stage startups to get bank loans. 

Exit plan vs. Collateral

No matter the type of Business Plan, no one wants to take on unnecessary risk. That is why they need to include a guaranteed ROI or loan, just in case things go south. Investors are looking for exit strategy, oftentimes in a form of liquidation or sales of their share in the company.

On the other hand, if the borrower is not able to repay their debt, the bank will proceed to take collateral, usually an asset like real estate, vehicles, equipment, etc. Including this in your bank business plan proves you are a low risk applicant for a loan. 

Ownership and freedom

The upside of bank loans, compared to fundings from investors, is that they do not require equity. Upon acquiring the loan you are able to continue doing business as you please. The bank has no saying in choices made in your company.

However, investors are funding business in exchange for equity, or shares in a company. This way you will lose partial ownership, and may have somewhat limited decision making. All of this has to be well formulated in an investor business plan, unlike in a bank business plan.

Experts Can Help

If you’re unsure how to write a business plan in general, let alone how to write it for the correct audience, consider hiring a professional. Professional Business Plan Writers tackle these challenges every day and can create a plan for you that will help you reach your goals, whether that’s acquiring a bank loan, investor funding, or being approved for a business visa for immigration purposes.