Why Banks are Asking for a Business Plan by Opening Business Bank Account
Have you ever considered getting a loan from a bank to fund your business? Interestingly, most successful businesses have gone through this path. The funding comes in handy whether it is a startup, you want to expand your small business or you want to grow more and acquire other businesses. Notably, one of the factors a bank will consider before lending your business money is the business plan. What is it and why should you have one? Additionally, why does your business need a bank account? Please read on to dig deeper into these and much more.
What is a Business Plan?
A business plan is a detailed document describing your business activities (your products or what you sell), objectives, goals, and the measures it has in place to meet its goals. It contains a business’s marketing strategies, financial projections, and how it is operated. Furthermore, your business plan can describe the business or your proposed project accurately and attractively.
Notably, both startups and already-running businesses need a business plan to secure a loan with most banks. Remember, a business plan can be shorter or longer depending on your business and its goals. Either way, a great business plan must have the following key sections;
- An executive summary
- Company Description
- Market Analysis
- Products and services sections
- Marketing Strategy
- Financial planning
The good thing is that having a business plan benefits you as a business owner. It can be a guide to your business. This is because it can lead you through the steps you need to take when managing and operating your business. Additionally, it can help you trace the previous finances of your business, and use this to forecast what to expect in the future; whether your business will succeed or not.
Read: How to Choose the Best Bank for your Personal and Business Needs
Moreover, other than borrowing money from a bank or any other financial institution, you can always attract investors with your great idea so they fund your plans. In such a case, you will use the business plan since you don’t have any track records yet.
Therefore, each new business should have a business plan. Also, you should review and update it periodically. After all, you may have met your previous goals, had a change of goals, or even shifted the direction your business is taking. Thus, maintaining the previous business plan will not make sense in such a scenario.
Why Banks Ask for Your Business Plan
Getting that loan for your business is never easy as you probably have already expected. It is a daunting process, and that is why you should know what to have when going to borrow some funds. In such a case, some of the things they will consider are your credit ratings, your financial statements, and your accounts receivable. Moreover, they will ask for your business plan. This is how you show them how much you believe in your business. So, why do banks insist on this? The following are some of the reasons why;
It Establishes Your Credibility
You need to first believe in your business before the bank does. Therefore, if you want to increase your credibility, have your business plan ready and present it to the bank.
A Business Plan Gives Your Background
One of the most important things you should describe in your business plan is what it does. For instance, if you are all for creating and selling quality products and ensuring consumer satisfaction, ensure you make the bank know this.
If you have an existing business, ensure you show your experience in whatever field you practice in. Moreover, if you have a management team, ensure it is well described in the business plan. Give out the names and short biographies of the principal members. Nonetheless, you should show the legal structure of your business.
It Shares Your Business’ Past, Present, and Future
The bank will have to look keenly into the achievements of your business in the past, at the moment, and the goals you are yet to meet. Also, it could refer to your financial projections; income, balance, and cash flow. Therefore, ensure you share this in the business plan so they can consider whether it is viable enough.
Read: How does your Bank (Not) Protect Your Personal Data and Business Secrets?
Importantly, you should be reasonable and real in your projections. Your margins should be in range with the industry averages. Also, show the bank what you have in place or the steps you are taking to ensure you accomplish your projections.
Nonetheless, the financials in your business plan should match the amount you want the bank to lend you. This, therefore, means that your business’s cash flow should be realistic and clear. The overall business plan should be complete. Besides, for easy predictions, don’t go too far away into the future when making the projections.
Remember, most banks require a business plan when you borrow a loan. However, not all of them will process it. The good thing is that those that do are interested in your business. They may even have an interest in creating a long-lasting relationship with you.
Why Your Business Needs a Bank Account
Any startup needs a business bank account. This is one of the most important steps to take as a business owner. After all, you should never mix your personal bank accounts with your business bank accounts. With a bank account, you can confidently borrow a loan from a bank as funding for your business.
Therefore, your business needs a bank account so you can keep your bookkeeping accurate and don’t mix things up with your personal account. Also, it is one way of giving your business a professional look. Furthermore, a business bank account makes tax preparation easier.
Read: 5 Things you Need to do Before Buying a Business Abroad
It is easier to manage your business if you have a business bank account. So, how do you get one? You can open a business bank account with Bank.Pro.
The Professionals of Bank Pro Will Make the Best Business Plan
At this point, you probably wonder where or how you can get a comprehensive and well-written business plan that you will use when applying for a bank loan. The good news is that you don’t have to go through the hassle on your own. Bank.pro has professionals that can lift the stress off your shoulders. Therefore, grab the opportunity to take advantage of their services now!
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