Business Plan For A Bank
In this edited excerpt, the authors discuss the ABCs of getting a bank loan for your business.Many of the most successful businesses are financed by banks, which can provide small to moderate amounts of capital at market costs.They don’t want control—at least beyond the control exerted in the covenants of a loan document. Bankers make loans, not investments, and as a general rule, they don’t want to wind up owning your company. You take out a loan and pay it back, perhaps in installments consisting of principal and interest, perhaps in payments of interest only, followed by a balloon payment of the principal.One of the nice things about debt financing is that the entrepreneur doesn’t have to give up ownership of his company to get it.Loan covenants may require you to do all sorts of things, from setting a minimum amount of working capital you must maintain to prohibiting you from making certain purchases or signing leases without bank approval.Be sure to have your accountant, financial advisor or attorney review your loan documents and spell out everything for you very carefully before you sign.
Strong competitors, price wars, me-too products, the fickle habits of the buying public and other market-related risks must be addressed.
Programs from the SBA provide funding of up to million, and each Wise Business Bank-Compliant Business Plan meets and exceeds bank and SBA requirements and guidelines.
The SBA offers a variety of programs to small business owners: The 7(a) SBA Loan Program, export loans, rural business loans, Community Advantage loans, the Express and Pilot programs, microloans, and the CDC 504 Loan Program.
Your banker (and most other investors) have to know that you recognize these risks and have well-thought-out ways to deal with them.
Besides, it’s the cash flow from operations that pays off bank loans.5. Bankers like to stress the personal aspect of their services.