Build a great business plan to support your loan application.

Banks and lenders love a good plan. Here are five rules to make your business plan shine.

Preparing a detailed business plan will inform a potential lender about your business proposal so that it can assess your application as favourably as possible.

1. Know your numbers

To inspire confidence in you as a borrower, it’s important you are familiar with your key financial figures, even if you don’t prepare your own financial statements. This includes current income, net profit and expenditure.

Include a profit and loss budget, and, if your business is new or you are starting a new business, prepare your personal credit history.

2. Estimate how much funding you need

Are you looking for funds to help with cash flow and operations on a regular basis, with a larger overdraft limit for occasional use? Or do you need one-off funds to open a new branch or purchase additional equipment?

Prepare an updated business plan to establish all of the factors in your application, including any partners and strategies.

3. Project your cash flow

You can use this to prepare pro-forma statements, or projections of what your business will make going forward, making adjustments based on past trends.

4. Provide proof of loan security

A lender will evaluate your risk factors to determine if you and your business are a good investment. Consider the maximum payment you can afford before meeting with your finance broker, who can advise you on whether you should offer collateral or a third party willing to guarantee the loan on your behalf.

5. Ask questions

A finance broker like Shire Home Loans will shop around on your behalf to find out what products are available. If you’re already a customer with one lender, discounts may be available. If one option is much cheaper, we can tell you if it carries higher fees or a likelihood of the interest rate changing.