A Step-by-Step Guide on How to Write a Business Plan (that Will Guarantee Loan Approval)

Are you thinking of putting up your own business? If yes, then congratulations. You are taking a big leap towards attaining not only financial freedom but also the security and stability of staying in the Philippines for good.

Apparently, putting up your own business is not that easy, especially when you still don’t have enough capital. You can save up for it, but how long will it take for you to meet your required capital? In that case, you can try borrowing money from banks or other private lenders.

Here comes the challenging part: the business plan. Applying for a Business Loan requires you to submit a business plan, which highlights all the details relating to your business. It is important that you take this part seriously because this proposal could make or break the approval of your loan.

Here’s a step-by-step guide on how to do it:

Step 1: Know and define your business concept. 

It all starts with an idea. Then, you turn this idea into something more tangible. At this point, your business plan should define the following – and this should reflect in your business plan:

• Vision and mission of your business
• Your target market and the limitations they experience, which will be augmented by your business
• Product or your solution to the market’s limitations
• Value proposition or your unique selling points
• Branding

Step 2: Get to know your market and industry. 

Most people skip this idea, thinking that the target market is already identified. Apparently, this is a big mistake.

Lenders need to know everything about your proposed business – and this should be based on facts. They need to see that there is really a need for your business as evidenced by facts or studies. Therefore, your business plan must show the following:

• Market research as backed up by personal interviews, surveys, and other forms of discussion from target market, suppliers, and industry experts.
• Growth potential and industry trends based on published studies
• Information about possible competitors (existing business)

Take some time to do this. This will enable you to get to know your chosen field and understand how the industry works.

Step 3: Draft your Business Plan outline. 

Now that you have all the necessary data you need to know about your business, it’s time to draft your business plan outline to keep everything organized.

You should follow the Department of Trade and Industry’s prescribed format:

• Executive Summary – This contains a brief overview of your business, including the nature of the business and the issue it aims to address. You should also include a shot discussion on how applying for a loan could help you grow your business.
• Marketing Plan – Lenders need to know how you plan to market your product and this is what they want to see in this area. Discuss the marketing strategies you will employ to achieve targeted sales, as well as market demographics and analysis of your competitors.
• Production Plan – At this section, you need to outline all aspects of your production process according to your chosen business – from raw materials to equipment, to overhead costs. This way, you can convince the lender that you have the capacity to meet your target sales.
• Organization and Management Plan – This outlines your capabilities, qualifications, and experience to run and manage a business.
• Financial Plan – This section showcases the potential financial strength of your business based on financial strategies and your projections that will prove your capacity to pay off the loan. Make sure you provide details such as loan purpose, loan repayment scheme, forecast of sales and profit, cash flow statement, return on investment, and break-even analysis among others.

Step 4: Add supporting information to back up your business plan. 

It’s not enough that you fill in the details needed in the Business Plan format. To guarantee approval, you must also be able to provide supporting documents that will back up your business plan.

This includes, but not limited to:

• Business permits
• Bank statements
• Contracts pertaining to business, including Lease Contract, Receivables, Purchase Agreement, etc.
• Market research findings
• Background of key employees

Step 5: Review your Business Plan

Congratulations! You finally drafted your Business Plan. The next thing you need to do is to review your plan, make sure that all the important details are included, and there are no errors (including grammar and spelling). They may not seem that important to you, but lenders, especially banks, pay attention to the tiniest detail, so make sure you review and proofread your Business Plan.

Remember that the Business Plan is your proposal to lenders who can help you in making your business in mind happen. Take this seriously to increase your chances of approval.