2 Key Elements of Financial Modeling for a Bank Loan Business Plan

 

Just like for financial projections, you need to base your financial model for a bank loan business plan on the three statement model, which consists of the income statement, balance sheet and cash flow. Alongside with the three statement model, making assumptions is the key for Financial Modeling . While there are many other elements of financial modeling, maybe none are more important than these two.

• Making assumptions

Assumptions are the foundation of financial modeling. So dedicate some time to considering them and committing them to paper. You will need to have a wide scope of assumptions from best to worst case scenarios in order to make a proper financial model for your Bank Business Plan . Brainstorm all of the possible outcomes you can imagine.

Making correct assumptions about the future financial state of your business is important for constructing the most optimal financial model. Therefore, before you start making your assumptions, collect all of the information you can find. Go through your own company records, conduct market research, search through public archives. The more information you can find the more accurate your assumptions will be.

While the future is hard to guess, preparing for a multitude of different outcomes based on facts will benefit you in making the best bank loan business plan.

• The three statement model

After making a list of assumptions, continue your financial modeling by forecasting your three statement model.

• Income statement

A forecasted income statement will predict your business future revenue. By comparing all of your revenue and gains to the total of your expenses, they show if your business will be able to make a profit or will be at a loss. This will be one of the most important things to present in your bank loan Business Plan . You will need to provide loan officers with proof that you'll be able to repay your debt, and an income statement is the way to do it. Managing a steady income is one of the things loan officers are expecting from your business.

• Balance sheet

Loan officers take careful consideration when choosing the right candidate for a loan. Banks do not take risks, and always do risk assessments. But even if candidates have good credit scores they still need to show what they have to offer as collateral. Collateral is usually in the form of assets that can be seized in event your business fails and you are not able to repay your loan.

This is why balance sheets are useful when doing your Financial Modeling. They show your business’s assets, shareholder equity and liability. For this reason, a balance sheet shows loan officers proof your business is financially stable and reliable, as well as

what you have to offer as collateral.

• Cash flow

Cash flow calculates the difference between inflow and outflow of money. This will show you how much money you will have on hand at any given moment. It compares all of the revenue you make from sales and all possible expenses you will have. Making sure you do not run out of money before you pay your loan fees is not only the key to running a stable business but also a requirement for getting a bank loan.

Financial modeling is a long number crunching process that has many elements and steps to it. But if you are making a financial model for a Bank Business Plan, pay extra attention to the assumptions you make and the three statement model, which are the key elements to getting a loan for your business.

6 Ways Loan Officers Expect to See Market Research Applied to Your Bank Business Plan

 

One of the main reasons that business failed is due to lack of proper market research. Bank loan officers know this. That is why they expect to see evidence of it throughout your Bank Business Plan.

What surprises most people is that loan officers expect to see market research in many ways. Some of these ways or more obvious than other. But, in either case, they will be looking for it so it’s important to know how it should be incorporated.

Executive Summary – This section of the bank business plan will be a broad overview of the entire business plan. Therefor, it should go without saying that market research will underpin a lot of the information presented here.

Industry Analysis – One of the more obvious places where Market Research is expected is the industry analysis. The research you do to determine and evaluate the overall size of the industry is purely market research. The sources you use to justify this information will also be scrutinized by the loan officer. So, make sure it’s a quality, reliable, trusted source.

Target Market – This should be a pretty obvious section of the bank business plan that will incorporate market research as well. While the industry analysis is the broad view, the target market hones in on exactly who your ideal client(s) is and why that is the case.

Marketing Plan – Once you understand your industry and target market through market research, you will be able to plan your marketing efforts. Marketing itself is another way that loan officers scrutinize your chance for success. Don’t skimp here. You need marketing or you will not have clients. No clients makes it pretty difficult to have sales. Without sales you can’t pay back your bank loan. Yet, many people justify skipping on marketing as a cost saving measure. It is a place officers would rather see you go big than ignore.

Sales Plan – Closely tied to the marketing plan is the sales plan. These are similar but address things from very different angles. Just as with the marketing section, make sure your plan ties back to the market research.

Financials – The financials are an area of the SBA Business Plan where people don’t always associate market research. Yet it is a key part of most of the assumptions you will make. For example, when you research what a commercial lease will cost in the city you plan to locate, that’s market research. When you determine what to sell your product for you’ll likely consider competitors. That’s also market research. This list goes on and on. This will be one of the most important areas of the bank business plan so make sure your assumptions are well supported with market research.

From the beginning to the end of the business plan, market research will play a vital role. These are some of the most important places but, not the only ones. Do thorough market research and without even realizing it, it will find its way into your plan. If you’re not sure where to start, hire a Professional Business Plan Writers. It is so important to the success of your bank business plan that it is well worth the investment.

2 Similarities and 2 Differences Between the Bank Business Plan and Information Memorandum

 

There are many times throughout the lifecycle of your business you will need to create specialized business documents. Two of the most popular and common are the Bank Business Plan and Information Memorandum. These are completely distinct documents, yet they are more similar than you may realize.

Understanding the differences and similarities can help round out your understanding of business documents. It may even give you some insight if you are considering writing your document yourself.

Similarities

Key Sections – When you first look at these documents you will see that they at first glance they really do look similar. This is because you will see several of the same sections. The sections that almost always appear in both include an Executive Summary, Industry Analysis, Sales & Marketing Plan, and the Financials to name a few.

It’s important to note that even though the same sections may appear in both documents, the contents and focus may be quite different. We’ll touch more on this in the next section.

Overall Layout – Not only are many of the sections the same but in general they will follow a similar order. Both documents will open with an Executive Summary and end with the Detailed Financials. The order of the other sections may be a bit more diverse. Though, this is true from business plan to business plan or Information Memorandum to information memorandum as well.

The reason for these variations themselves may vary. It can be anything from the business model to the intended audience and may have little to do with the type of document. The important point here, is that at first glance, these documents are quite similar.

Differences

The Purpose – What really sets a bank business plan and information memorandum apart are their intended purpose. In the case of a bank business plan, you are attempting to get someone to loan you money. In contrast the purpose of the information memorandum is to entice investors or buyers to buy a share of or outright purchase your entire business.

The Audience – Getting into more detail, you’re writing these documents to appeal to two very distinct audiences. On one hand, for the Bank Business Plan, your audience is a bank representative or loan officer. In this case, their biggest concern is whether or not you will be able to pay back your loan. They will primarily review your document from a stability and cash flow perspective.

Meanwhile, investors or buyers are mainly interested in growth potential to ensure a good return on investment. That is why, although you’ll have the same general information in the financial section, what you focus on and how it is presented will differ. Here, your audience is likely less risk-averse with the trade off of the chance for more return.

Professionals See This Clearly

It can be anxiety-inducing trying to decide what to do for your specific document. You need to consider so many factors. Given the importance a bank business plan or information memorandum can have on the overall success of your business, many people choose to hire Professional Business Plan Writers. Fees for the most experienced may feel steep but, it is an important investment in your future success, regardless of what the end goal is for you.

3 Tips for the Financial Projections in your Business Plan or Information Memorandum

 

Whether you are creating Financial Projections for your business plan, an information memorandum, a pitch deck, or any other business document these helpful tips will still apply:

1. Substantiate Your Assumptions

When creating the financial projections for your business plan or information memorandum, you will use a set of assumptions. The projections are all about predicting the future, so they are going to be a guess but, they must be an educated guess.

You should make it known throughout the Information Memorandum or business plan where your assumptions came from. In part, this will be explained in writing in other sections of the respective document, and the financial section. 

An example of what this may read something like this, “We are projecting 10% growth based on future product release and historical year on year growth”. Don’t just guess. Put the effort into your financial projections and make it evident how you arrived at them. 

2. Present for Your Audience

The financial projections must be accurate and realistic to be believable. Great financial projections will also be created with their audience in mind. Certain types of audiences will be more interested in some components of your projections than others and you need to be able to identify this or trust professionals that are skilled at this.

In either case, ensuring the financial projections are prepared and presented with your audience in mind will be very beneficial. It reduces the number of questions that are asked, possibly speeding up the review process. It will also ensure that your audience remains interested, as they are looking at financial information that is relevant to them and will help them quickly make the decision they seek to make. 

3. Follow Standard Formats – 

While you need to present the financial projections with your audience and mind you also shouldn’t reinvent the wheel. All three core financial statements (income statement, cash flow statement, and balance sheet), as well as other types of analysis (example: break even analysis) follow a similar format. You need to present this information in a predictable layout to avoid confusion.

If you decide to deviate from this, you risk confusion. Chances are, busy business brokers, investors, loan officers and other common audiences, are not going to take the time to figure out overly complicated financial projections. Not only do they not have time but, it will make you look unprofessional.

At the end of the day, financial projections in the business, information memorandum and other documents are the same. They are all about using the best information at your disposal to realistically predict the future. The more believable these predictions, the more professional they will appear.

Although your financial projections should be realistic and follow a standard order and format, you can still customize the presentation for the audience. Make sure you are highlighting the information that matters the most to your audience and you will be well on your way to achieving your goals, whatever they may be.

Don’t be afraid to hire a professional to prepare your Financial Projections, your business plan, or your information memorandum. It can give extra validity to your business and your numbers.

Why to Rely on Financial Modeling to Strengthen Your Bank Business Plan

When it comes to the Bank Business Plan, financial modeling is discussed far less than financial projections. While financial projections are key to a strong plan, financial modeling will strengthen it even further. Financial projections can’t – or at least shouldn’t – exist without financial modeling, so it makes sense that they are just as, if not more, important. Giving them the attention they deserve will improve your financial projections and your bank business plan overall.

Defining Financial Modeling & It’s Role in Financial Projections

The first step to appreciating how and why to rely on financial modeling in the bank business plan is to make sure you understand financial modeling. Financial modeling is often confused with financial projections but, the two are quite different.

Financial projections are static, set figures that do not change. Financial modeling is an interactive, dynamic process that will allow you to determine or set many numbers, including financial projections. It is also used to look at potential outcomes of anything that involves numbers and finances.

Financial modeling is a working spreadsheet – most commonly created in Excel - that allows you to put in various different inputs to see how it will impact outputs. When it comes to financial projections in your bank business plan, financial modeling is the process of putting in potential revenues and expected expenses as well as other variables to arrive at the eventual financial projections.

The Importance of Financial Modeling in the Bank Business Plan

Clarifying Assumptions – You will explain the assumptions that go into your Financial Projections throughout your bank business plan. You will even note some of the assumptions next to or as a footnote with the financial projections. Some lenders will want further clarification and that is most easily addressed by showing them the formulas used in your financial modeling.

Proving Reasonability – When you are working on financial modeling to determine the financial projections for your bank business plan, you will likely examine a wide range of your numbers. In most cases, you will go with a sensible number somewhere in the middle. If the lender or loan officer questions how you arrived at your number, you can show you picked a likely number in the middle of all reasonable expectations.

Demonstrating Thoroughness – Financial modeling does more than help you arrive at the final numbers in your bank business plan, they also ensure you think through all possibilities. It is that sort of thorough consideration that is likely to impress loan officers and make them feel more confident that you will be able to successfully run your business. It may not be the deciding factor but, it can help sway them one way or another.

Conclusion

While financial projections tend to get all the glory in the Bank Business Plan, they would not exist without financial modeling. The process of arriving at the final number is just as – if not more – important than the final numbers themselves. When a potential lender or loan officer want to dig deeper into your financials, having clear and well-considered financial modeling setup will make the process easy and help strengthen your overall application.

Why Market Research is More Important in the Bank Business Plan for a New Business

Market research is the process of learning about the overall industry down to target markets. It includes identifying the real needs, desires, and preferences of your consumers. Or, in other words, making sure a customer exists for your product or service. Market Research is a key part of any business plan but, is especially important in a bank busines plan for a new business.

Generally speaking, bank business plans will place a greater emphasis on your financials than most other types of business plans. The reason for this is that a bank’s motivation is different than an investor or a potential partner. They are less concerned with the overall trajectory and potential of your business and more concerned with whether or not you will be able to make your monthly loan payment.

For this reason, the financials in the Bank Business Plan become the focus. Banks rely on prior actual performance, in conjunction with financial projections, to make their decision. However, if your business is yet to launch or is just starting out, you won’t have meaningful actual numbers. So, how do you lay a strong enough foundation that makes a bank or other lender feel confident your business will generate enough revenue to pay the bills? The answer: market research.

If your bank business plan doesn’t have actuals to rely on, it will be based almost solely on projections. Anyone can pull random numbers from the air to create financial projections but, they must be able to be substantiated. Market Research is the best way to convince the bank that the sales, and therefor cash flow, projections are realistic and likely to be achieved.

Market research validates that your assumptions can be achieved by providing important information like the total size of the market and that there is room in the market (in relation to competitors) for your business. It should also show that there is a real appetite from real consumers. This may be demonstrated by early adopters, or feedback from focus groups or surveys.

It’s important to note that a loan officer won’t just consider market research, financial projections, or any other aspect of the bank business plan when making their decision. It will also rely on your personal financials and credit. Again, this goes back to ensuring that the loan will be repaid. In many cases, you will be personally responsible for repaying the loan even if the business is unable to or it closes.

Given the importance that market research plays in the bank business plan, you may want to consider hiring a professional. Professional business plan writing firms tend to offer many related business planning services in addition to the writing plans themselves. This includes things like market research and Financial Modeling. Depending on your comfort level with finances, market research, or writing you may want to consider having them do your entire plan from start to finish.

However you prepare your plan, especially if you are a new business, make sure your market research is top notch. This will put your Bank Business Plan on the right track and increase your chances of approval.

The Role of Market Research in the Information Memorandum

 

When planning to sell a business you will need to prepare an Information Memorandum. This document is similar to a business plan. It is meant to provide an overview of the business and insight into the company’s value in order to entice prospective buyers. A lot of what buyers are looking for is potential. The section that helps inform a great deal of this potential is the market overview, which should be based on current market research.

Market research is the process of identifying consumer needs and preferences. It also involves identifying the total size of the industry and the customer base. When it comes to your information memorandum, the more thorough the Market Research the more you’ll be able to justify other sections of the plan.

Thorough market research will allow you to:

 

Demonstrate market share

You can’t demonstrate your company’s place in the market without describing the overall market. If you’ve been busy working in your business, things around you may have changed without you realizing it. When you do market research, you get to see the real picture. You will also be able to identify what percent of the total market you are capturing. This is of particular interest to competitors who may buy your business simply to expand their market share.

Justify financial projections

In the financial section of the information memorandum, you will report historic information as well as projections for the future. When creating the projections, this should not only be based on your company’s financial trends but, overall market trends as well. It gives more validity to your numbers.

Show future potential.

As already mentioned, one of the most important parts of the business plan is the market overview. Even if your business is under-performing now, market research shows the future potential, making it far more appealing to buyers. Plenty of companies will purchase failing businesses if they know there is an upside. Market Research is where this can become evident.

Receive top dollar.

Ultimately, the reason it is so important to use market research in the information memorandum is because your goal is most likely to sell the business for as much money as possible. It doesn’t matter if your business is succeeding right now or not, if there is a reasonable potential for it to perform well you can receive top dollar. Business values are subjective and acquisition prices can come down to the highest bidder. The more people you have interested in your business, the higher the final offer.

Since information memorandums are so similar to business plans, business planning professionals can help you. They will be able to complete the information memorandum with buyers in mind. Business plan writers and other similar professionals are accustomed to creating documents that “sell” the business. Ideally, you’ll be using a mergers & acquisitions (M&A) firm to handle your business sale. Even they often outsource the creation of the information memorandum - or at the very least market research - to streamline their businesses. Regardless your situation, hiring professionals can ensure you get the market research and the Information Memorandum that best represents your business.

 

How Financial Modeling should be applied to Your Bank Business Plan

 

The practice and exercise of Financial Modeling will play a large role in any business plan, especially a bank business plan.  Every business plan should be written with the audience in mind.  When it comes to the bank business plan, the audience will be more critical of your financial modeling techniques and ensuring that your numbers are reasonable than in other types of business plans.  Due to this high scrutiny, there are a few things to keep in mind about how your financial modeling will tie into the final bank business plan.

Have Financial Modeling Output Linked to Final Financial Projections

First and foremost, your financial modeling should be linked via the spreadsheet or other software program features to your financial projections that will be put into the Bank Business Plan.  Your financial modeling may get expansive and relatively complicated as your bank business plan evolves and you begin to plug in all the information you will need.  It is important to keep track of where all the numbers are flowing from so you can fully understand and double check your numbers.

Providing the Backup for Your Financial Projections

Proper linking is important for providing back up.  If your bank business plan is done well, it should raise questions.  A great deal of those questions tends to be around finances.  When creating the financial modeling for your bank Business Plan, it is going to be based on a lot of assumptions, especially if the business is brand new.  When you properly label and link your inputs, including making notes as to the assumptions, this will provide further detail that you will be able to quickly reference to answer any questions.

Include Key Financial Modeling Elements in the Appendices

Because so many of the assumptions behind your Financial Modeling will – or at least should - be written in your financial projections, the details behind it will be in the financial models themselves.  Some financial models are difficult to capture due to their size and expansiveness.  However, those that can be paired down, shown in a summary version, of where the entire financial model fits, should be considered for the appendices.  In the end, you likely won’t include everything but, there are certain pieces of information you will decide to include.

Financial Modeling Exercises Help Demonstrate Your Numbers are Reasonable

In a bank business plan, more than other types of business plans, they don’t want to know the best possible outcome, they want to know the reasonable, most probable, and conservative outcome.  They will also be more interested in the care with which you have approached your cash flow plan.  You will need to balance reinvesting in the business so it can grow, while also making sure you have enough available cash to cover your loan payment.

Regardless what type of business plan you are creating, financial modeling will play a huge part.  However, there is heightened scrutiny around your financials in a Bank Business Plan in many ways.  When numbers are uncertain and based off of assumptions, you need to put a loan officer’s mind at ease.  This all begins with effective financial modeling.

 

 

 

 

Pursuing a Business Degree? 5 Reasons to Consider Having Your Final Project, Capstone, or Thesis Reviewed by Professionals

 

When pursuing a general business degree such as a bachelor’s of business administration (BBA), bachelor’s of business management (BBS), a master’s of business administration (MBA), or a doctorate of business administration (DBA), a final project or report in the form of a Business Plan or a thesis about a particular aspect of business is typically required. 

 

 

Read More Pursuing a Business Degree? 5 Reasons to Consider Having Your Final Project, Capstone, or Thesis Reviewed by Professionals

 

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Defining the Main Components of a Business Plan and Information Memorandum

 

Although a business plan is different from an Information Memorandum, many of the components are the same, although they may go by different names from document to document. These are some of the most common sections that overlap between the two.

1. Executive Summary – It is always recommended that you write the executive summary last. This is a one- or two-page overview of your entire Business Plan or information memorandum. It will include, at a minimum, a description of the main products or services, why you’re starting/selling the business, and will touch on the topline financials.

2. Investment Opportunity – You may touch on the investment opportunity in the Executive Summary but, in this section of the information memorandum or business plan you will go in depth about why the business is a good fit for an investor or acquirer. It will touch on some of the strongest and most compelling aspects such as existing big-name clients, percent of market capture, committed future sales, or strong management team.

3. Company Description – This is the background of the company. It will cover important information such as year of establishment, business structure, recent news and sometimes will include top line financials but, with slightly more detail than the Executive Summary.

4. Product/Service Overview – This section of the Information Memorandum or business plan is where you will go into depth about the products/services offered. You will likely discuss what is top selling, what makes up the majority of sales, as well as the margin that is captured from each various product or service category. If you have a limited number of products, you will likely discuss each one individually. If you have several, you will discuss them in segments or groups.

5. Market Overview – In this section, often thought of as one of the most important foundational elements of the business plan or information memorandum, you will discuss the business’s position in the larger business landscape. It includes a statement about the entire industry, trends, competitors, as well as who the target markets are.

6. Management & Structure – Potential investors often want to know who is responsible for the day to day decisions in the business. Typically, this section will include an organizational chart as well as a description about key management positions and a biography of the people that fill them.

7. Financials – In the end, it is often all about the numbers. You will likely touch on various financial elements throughout the business plan or information memorandum as it makes sense. This is where they will be covered in detail. At a minimum, this will include projections of the key financial statements. Existing businesses will also present their recent and current actuals.

How these sections are ordered will vary between the business plan and information memorandum. It may even vary business plan to business plan or information memorandum to information memorandum. Beyond the Executive Summary, which is always first, and the Financials, which will almost always be last or second to last, the order of the rest of the sections may change to make sense for the specific plan. Some of these sections will also be broken down and covered over multiple sections depending on the business.

If you’re unsure how to construct your Business Plan or information memorandum to be the best representation for your business, consider hiring professional business plan or information memorandum writers like those at Joorney.

 

4 Helpful Tips When Using Financial Modeling to Create Financial Projections for your Business Plan

Financial modeling is almost always used to create the financial projections of your business plan. Financial models are typically created in Excel or Google Sheets. These programs give them the flexibility to incorporate necessary formulas and continuously augment the inputs. Financial Modeling can feel overwhelming if you are not a finance person or familiar with spreadsheet software. These tips can help you create models that are easy to establish, use, and will be easy to explain to others.

1. Detailed Labels

When you begin creating financial models, especially if you are the only using them, there is a tendency not to waste time on labels. After all, you understand it, right? However, your financial modeling will quickly expand and it’s easy to lose track of what various cells, columns, and formulas were meant for or calculating. Label everything in as much detail as necessary to eliminate issues down the road.

Later on, once the Financial Projections of your Business Plan are presented, it may raise questions about your financial modeling techniques. It will be much easier to address if the financial models are clearly labeled. This will create an easier foundation for explanation and understanding.

2. Separate Inputs

Your financial modeling should not only be clearly labeled, it should also be well-organized. One of the primary ways to do that is by having your inputs, formulas and outputs separate and clearly defined. If you have a lot of inputs and the model may be used by others, you might want to consider having a single sheet for all inputs. If you want to keep your inputs in the same sheet in which they apply, you may want to color code them. At a minimum, you should label them as inputs with text.

3. Structure in a Natural Way

When you are working on financial modeling, you want to make sure they are readable. In addition to the tips above, this includes organizing the way the information is laid out in a predictable manner that is readable and relatable. This means laying out your information from top to bottom or left to right. Start with the input, then calculations, then output. Structuring your sheet(s) this way makes it more intuitive not only for yourself but, anyone else that may view or use them.

4. Link Sheets

As your financial modeling efforts to create your Financial Projections in your business plan evolve, you may end up with quite complicated spreadsheets. Don’t be afraid to break down the information on various sheets within the same Excel or Google Sheets document. Using various sheets makes it easier to organize your information. Then, you can simply link pertinent information from one sheet to another so the information throughout your entire document flows. If you are unsure how to do this, review the help feature in Excel or Sheets, search Google or YouTube or consult an Excel/Google Sheets expert.

Financial Modeling can seem like a monumental task at times. The tips above will help ensure your financial modeling doesn’t become overwhelming while you are actively creating and utilizing it. The models will also make it easier to demonstrate and explain to outside parties how you arrived at the financial projections in your business plan.

The Power of Having a Pitch Deck Accompany Your Bank Business Plan

 

Pitch decks are most commonly used when approaching potential investors. However, they can make a powerful accompaniment to your Bank Business Plan as well. Although they are rarely requested and almost never required, including a pitch deck when you submit or present your full bank business plan can increase your chances of securing your desired business loan or line of credit.

Introduction to Your Business

Given the sheer number of bank business plans that business loan officers review, they are unlikely to read every single page, especially as a bank business plan tends to be around 20-40 pages on average. Including a Pitch Deck gives you the ability to give them a quick overview of the most important aspects of your bank business plan so they have the full picture prior to reading through your full plan, regardless which sections they choose to fully read. The pitch deck can be a great way to introduce the business in a way that allows you to better control the narrative and set the tone before your full bank business plan is reviewed.

Emotional Appeal

Even bankers and loan officers are human, and we know that humans cannot completely eliminate emotions from their decision-making process. The pitch deck allows you to appeal to emotions in two ways. It can create excitement but, it also allows you to weave more of a story around the business. This is a helpful contrast to the presentation of the formal bank Business Plan. Naturally, bankers will want all the details but, starting them off with a pitch deck constructed to appeal to emotions can be a powerful tool.

Visual Appeal

Some people are more visual than others. You should definitely have visual elements in your bank business plan but, they should be limited to adhere to the standard expectations and level of formality. A pitch deck gives you more leeway to focus more on the visual appeal and present your business briefly in a visually stunning way.

Strengthens Weak Plans

How a loan officer will perceive your Pitch Deck will vary person to person. However, for those that do welcome and review it, it can help strengthen your strongest points and draw attention away from weaker points. As an example, say you only have fair personal credit. Personal financial position is very important when it comes to a bank business plan because, in most cases, you will be personally responsible for the loan even if the business fails. If your personal financials are borderline for approval, the pitch deck could be what pushes it over the line and helps you secure your loan.

Although rarely requested or required, the pitch deck can be a powerful addition to your Bank Business Plan. It helps you strengthen your business case and present information in a way that might be more favorable to the person responsible for approving your loan. While it may not always help, it certainly doesn’t hurt. If you want to make sure it’s appropriate for your audience, consider having a professional create your pitch deck, whether or not you completed the business plan on your own.

 

7 Things Professional Business Plan Writers Always Include in a Bank Business Plan

 

Professional business plan writers are experts at creating a business plan tailored to a specific audience. When it comes to writing a Bank Business Plan, there are certain aspects that these professionals will add or emphasize.

1. Direct Language – There is no need for overly descriptive or “flowery” language in a bank business plan. In fact, Professional Business Plan Writers will do the opposite. Lenders prefer the bank business plan get to the point and not be oversold.

2. Formal Structure – Unlike some other types of business plans, a bank business plan should be very formal in nature. Professional business plan writers know to keep the structure and content in an organized and predictable order. Although it won’t be the same for every business, it will for the most part follow a similar format. A bank business plan is not the time to try to break the mold.

3. Thorough Market Research – Lenders want to know you’ve done your research since it is only by understanding the market that you can adequately identify opportunities as well as risks and threats. The Market Overview section of the bank business plan is where professional business plan writers will make sure this is evident.

4. Detailed Competitor Analysis – A competitor analysis will result from Market Research. It is a key to understanding how to position, market, and even price your product or service.

5. Personal Financial Information – There is a section that will be in your bank business plan that is likely not to be in any other type of business plan, and that is your personal financial information. In a bank business plan, professional business plan writers know to include this because if the business does not succeed, you as the owner(s) will become personally responsible. The lenders have one overriding goal and that is to be paid back with interest.

6. Moderate Financial Projections – Market research allows you to understand the maximum potential of the business. When presenting to lenders, professional Business Plan Writers know to use moderate expectations. Preparing a business plan for an investor would likely require a different strategy but, when it comes to a bank business plan, the idea is to show that you can survive – and therefore pay your loan – under the most likely and reasonable of circumstances.

7. Detailed Appendixes – Lenders tend to be highly detailed people and, as such, they don’t want to have to go searching for answers to their questions. They also tend to enjoy and prefer getting stuck in the details of things, especially as it relates to numbers. As such, you should have all the backup for your research, assumptions, and numbers attached to your bank business plan. Professional business plan writers may not do this for all audiences but, mostly likely will for a bank business plan.

Although most of these aspects or components will be in most business plans, the way they are written and presented will be specific to the bank business plan. Following the advice of professional business plan writers can help you ensure your bank Business Plan is well received. Or, if you are able, you should consider hiring one to prepare your business plan for you.

 

Why Not to Skimp on Market Research in Your Bank Business Plan

When you are preparing your bank business plan to apply for a bank loan or line of credit, it is imperative that you do not skimp on market research. Market Research is a very powerful aspect and tool of any business plan but, this is especially true when you are applying for outside funding through the likes of a bank or investors.

Loan officers will be reviewing your Bank Business Plan with two questions top of mind.

1. Business Viability

The first is if your business or business idea (if not yet established) is viable, likely to succeed, and likely to be able to support repayment of a loan. The key to proving this is market research. Market research takes many shapes and forms and is both qualitative and quantitative in nature. The current figures of your business if it is already up and running will factor in but, that is not nearly enough.

Proving business viability and demonstrating that you have thoroughly considered your business or future plans will rely heavily on market research. Solid, comprehensive market research that is incorporated throughout your bank Business Plan is the best way to prove viability. Naturally, market research will be covered in depth in the market overview section of your business plan. However, you should use supporting elements in other appropriate areas of the business plan to back up your points. This could be when you are discussing the products/services and will certainly be included in your financials. The importance of supporting your entire business plan with market research cannot be stressed enough.

2. Personal Credit

The second major area of concern for a bank officer is your personal credit and that of any other business owners. Unlike in investments, when it comes to bank loans, you will be personally liable for the debt should the business fail. They are unlikely to extend a loan or credit if they feel the business is not likely to succeed but, no one can predict the future and banks are aware that businesses fail for all sorts of unpredictable reasons.

Especially if your personal credit history or personal finances are not in the best shape, you are going to have to rely on your bank business plan overall to carry you through. Proving a viable business is important regardless but, it becomes even more important in this case. As already stated, the key to crafting a solid bank business plan is market research.

Mitigating Risk

Overall, a bank loan officer’s purpose is to mitigate risk. In this case, mitigating risk is two-fold. It ensures the business is likely to succeed, which should be largely supported by market research, and if the individuals are likely to be able to cover the loan if the business is not successful. The bank business plan is the perfect format to address both of these aspects. Unlike other types of business plans, the bank business plan should focus on being very risk adverse and that must include issues around personal credit and Market Research. Addressing these issues and tying them in will make the strongest possible case for your business bank loan or line of credit application.

 

How Your Bank Business Plan Can Translate to a Pitch Deck

Typically, a pitch deck is used when approaching investors. It is much less common when appealing to potential lenders. The Pitch Deck is an abbreviated, typically more visual, presentation about your business idea. Although it is a rare and not expected, it can be a unique and beneficial way to gain interest in your bank business plan.

Memorable

When it comes to appealing to potential banks and other lenders, doing something out of the norm for the application process can be a little risky. However, a pitch deck, especially one that can stand on its own and doesn’t require an accompanying presentation to be understood, can help your application stand out. Part of lenders’ core responsibility is to review any small business loan application and Bank Business Plan that may cross their desk. However, that can be a lot of business plans and they will only choose the most appealing of the lot. Your bank business plan must be solid and appealing but, translating that to a pitch deck to capture attention on its own or during a presentation can be a game changer.

Top Line Financials

In a pitch deck, you may likely only present top line and summarized financials. However, you will still need to back all of these up with realistic, detail financials in the bank business plan. Presenting the top line without the detail immediately accessible will help them see the “forest for the trees” at first sight. Depending on your specific business, this may be a huge advantage. If your situation is the opposite, you can position the financials you include in the Professional Pitch Deck differently and give relevant detail before showing overall, top line numbers. The order in which some financials are presented can make a difference to perception and are much harder to control in the business plan.

Business Highlights

It’s not just the financials that will likely benefit from being presented in a pitch deck format but, rather the entire bank business plan. A pitch deck by nature is a highlight of your business. While it should be a fair and accurate representation of your business, it is also your chance to make a first impression. The bank Business Plan could also be considered your opportunity to make a first impression, but a pitch deck is even more abbreviated. It allows you to be very strategic with what information a lender first sees. It is a way to give a carefully curated introduction to your business that will hopefully lead to a lender wanting to dig into the full bank business plan.

Although a pitch deck is rarely required or even expected in a bank business plan presentation, it can certainly be an added benefit. It is a powerful way to make a quick introduction to your business to gauge or perhaps influence the interest of the lender. However, as with most things in business, if you know your audience, tailor your presentation to them. If you know the bank manager or other bank associates that will consider your Bank Business Plan, use that information to your advantage. A pitch deck may not always be appropriate for a bank presentation but, in cases where it is, it can create an advantage when done well.