Small business owners generally need some type of plan to help focus strategy, assign and track responsibilities, manage money and more. A lengthy formal document known as a business plan can arrange all your ideas on this front into concrete action plans. However, creating a formal business plan can be an overwhelming and time-consuming document to put together, especially when you’re working hard to grow your business. But it’s generally worth it, as some financial institutions require business plans as part of loan applications.
Business plans and small business loans often go hand in hand. That’s because all business plans include a financial plan that can help you determine when you might need funding. And then, with your business plan all ready to go, you might be more likely to get approved for borrower-friendly funding. The best funding sources often come with such low interest rates and long repayment terms that their repayment burden feels minimal.
Of course, this all might have you asking, “Do I need a business plan to get a small business loan?” Find out more below.
A business plan is a document that lays out a roadmap for all your most important operations. That includes marketing, sales, distribution, production, and objectives. A great business plan also includes robust competitor and break-even analyses to prove that your business is more likely to succeed than fail. The more persuasive your plan, the more likely any lenders to whom you show it will fund your business.
The answer to this question is often, but not always, yes – as it tends to vary by lender. For example, SmartBiz® doesn’t require applicants to submit business plans, which means you can get SBA 7(a) loans and bank term loans without the time and effort that goes into creating a business plan. It is important to note that even when lenders do require business plans, these documents aren’t an automatic path to approval.
If you are approaching a traditional bank for a loan for a small business, your loan officer may require a business plan to look more favorably on your application. You may be required to provide a business plan whether you’re applying for SBA loans or traditional bank loans.
However, if you’re using an alternative small business funding lender, you don’t need to present this document at all. That’s just one way in which alternative online lenders like SmartBiz are more flexible. These lenders typically provide online applications which can show loan options that you may qualify for. You’ll also have easy access to customer service for any assistance you need, which isn’t always the case with traditional banks.
Traditional banks may require business plans alongside the following documents:
SmartBiz CEO Evan Singer was recently interviewed about the requirements to get an SBA loan through the SmartBiz website. He said, “SmartBiz doesn’t require a business plan or projections, which is one of the ways it differs from many other SBA lenders.”
What are the documents required by SmartBiz to secure funding? You’ll need to collect a variety of personal and business information including those below.
Even though you don’t always need a business plan to get funding, there are many reasons to create one. These reasons include the following.
To learn more about what a formal business plan should include, visit the Small Business Association website. Are you a small business owner seeking funding to expand your business? Visit the SmartBiz website today and find out if you’re qualified for an SBA loan in 5 minutes or less.*