For Raising Capital

For Financial Institutions

What type of business are you planning on starting? Your business plan will vary a great deal depending on whether you plan to manufacture a product, provide a service, start a high technology company, or start a retail business. The following are some points to consider when modifying your business plan.

• Financial institutions want assurance that loans will be repaid in an orderly fashion. If you intend using this plan to present to lenders, include:
  
  • How much of a loan you require
  • How you plan to use the funds
  • What the loan will accomplish—how will it make the business stronger?
  • Requested repayment terms (number of years to repay). You will probably not have much negotiating room on interest rate but may be able to negotiate a longer repayment term, which will help cash flow.
  • Collateral offered, and a list of all existing liens against collateral

For Investors

• Investors have a different perspective. They are looking for dramatic growth, and they expect to share in the rewards:
  
  • Funds needed short-term
  • Funds needed in two to five years
  • How the company will use the funds, and what this will accomplish for growth.
  • Estimated return on investment
  • Exit strategy for investors (buyback, sale, or IPO)
  • Percent of ownership that you will give up to investors
  • Milestones or conditions that you will accept
  • Financial reporting to be provided
  • Involvement of investors on the board or in management

A well thought out business plan typically takes several weeks to complete. Most of that time is spent in research and planning. That’s why the business plan can be of such help to a new business – it gives you an opportunity to do research in ways you may not have considered previously. Take time to prepare the plan properly. Make sure you track your information and keep notes, so you can expand on your plan or answer questions later.

Back to more Business Plan for a Startup Business

 

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