Business Plans – Frequently Asked Questions 2

So this comes back to the importance of the sales projections being reasonable and supportable. Supporting you and your business’ credibility, while being believable and providing the potential investor with a solid reason to say “yes”. So, complete business plans contain reasonable sales projections.

#3 How many years of forecast projections will the bank need?

Most banks prefer three years of forecast projections to be included in business plans. The reason for this is that the average tenor of a term loan is three years. So they will want to see forecasts for the life of the loan that they are being asked to provide. If you are only seeking a short-term loan, say six months, then you could probably provide a one year forecast. But it’s always good to check with the bank to see what they require. #4 Are one page business plans sufficient for small business loan applications?

Generally speaking, one page business plans are not sufficient for small business loan applications. A one page business plan usually results in a great deal of questioning by the bank, a delay in the approval process, and diminished credibility about the depth and future performance of the business. However, if all you are after is a credit card, then it might be sufficient. But you always need to bear in mind that the sooner the bank becomes familiar with your business and comfortable with its future direction, the sooner the bank will rely on the business solely in terms of its ability to get its money back. So we always encourage small business owners that a full business plan is the best way to go.

 

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