How to Write a Business Plan for a Loan: What Underwriting Reads, in the Order It Reads It
A business plan for a loan is a credit document. What goes in it, and who actually reads it.
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The plan in the order it gets written, from the reader to the cold read
Every route is on the small business loans page; a plan is usually read on a bank-style business term loan or a longer file.
- One page is read first
- Every figure is reconciled
- Bank or SBA: several weeks to a few months
Rates, factor rates, fees and terms are set by the funding provider that makes your offer and are disclosed in that provider's agreement. Figures on this page are illustrative ranges from providers in our network, not offers. Funding times depend on the funding provider and are subject to provider approval and document turnaround. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
Step 1. Do I need a business plan to get a loan?
A plan has one job: let someone who has never met you decide whether the cash flow covers a new payment. On many routes nobody reads one, so the first question is who decides.
| The route | Is a plan read? | What the decision turns on |
|---|---|---|
| SBA loans, 7(a) and 504 | Yes, closely | Filed returns, cash flow against the proposed payment, the use of funds, owner equity, collateral and credit |
| A bank term loan or line | Yes, usually | Filed returns, interim financials, the relationship, collateral and credit |
| Startup or acquisition financing | Yes, closely | The plan, the owner's experience, the projections and the figures behind the purchase |
| Working capital and advances | Usually not | Bank statements: deposit volume, consistency, negative days and existing debits |
| Invoice factoring | Not the plan | Your customers' credit and your accounts-receivable aging report |
| Equipment financing | Rarely | The asset, the application, time in business and credit |
SBA loans, 7(a) and 504
Yes, closely
Turns on: Filed returns, cash flow against the proposed payment, the use of funds, owner equity, collateral and credit
A bank term loan or line
Yes, usually
Turns on: Filed returns, interim financials, the relationship, collateral and credit
Startup or acquisition financing
Yes, closely
Turns on: The plan, the owner's experience, the projections and the figures behind the purchase
Working capital and advances
Usually not
Turns on: Bank statements: deposit volume, consistency, negative days and existing debits
Invoice factoring
Not the plan
Turns on: Your customers' credit and your accounts-receivable aging report
Equipment financing
Rarely
Turns on: The asset, the application, time in business and credit
What is read varies depending on the funding provider or lender. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
What a bank-statement file is decided on instead
On a working-capital or advance file, a provider in the network typically asks for three months of bank statements (four in CA, NY, FL and GA with some providers) and reads five things in them: deposit volume, how alike the months look and how deep the worst one is, negative days and returned items, how much of each month is already committed to other debits, and whether every month arrived whole. Nothing on that list improves with narrative. An accurate debt schedule and complete statements improve it.
- Young business
Under two years in business
- No plan
A bank-statement product
- Docs
No filed returns or statements
Decisions from some providers the same day, depending on the provider. Subject to provider approval and document turnaround.
Step 2. Write the one-page summary first
One page, and it exists to make the rest readable. Underwriting reads it first and checks every later number against it.
- 1
What the business does
And who pays for it, in one or two sentences.
- 2
How much you are asking for
And under which product, so the reader knows which test applies.
- 3
What the money buys
Down to the line item, matching the use of funds in step 3.
- 4
What that purchase changes
The revenue, margin or cost it moves, and when.
- 5
Which cash flow repays it
With the new payment shown as a share of a normal month.
Two sentences do more work than the rest of the page: the use of funds and the repayment statement. If the repayment sentence is uncomfortable to write, the amount is probably wrong rather than the wording.
Before you write the fifth line
Test the payment
Model the payment you expect against your weakest month of deposits rather than your average one.
Run it yourself first · business loan calculatorHow providers size a request: how much business financing you can get
Why write it even when no plan is read
You will be asked the same five questions on a call with a funding advisor or a provider. Having them written down, with the figures, keeps the answers consistent from the application to the agreement.
Step 3. Cost the use of funds, line by line
This is the section that can be checked against a third party before anything is funded, which is why files are won and lost here.
Rule 1
The total equals the request
A plan that asks for one figure and lists uses summing to another invites a counter-offer at the lower number.
Rule 2
Working capital is a line, not a label
Say which weeks of payroll, which inventory cycle, which seasonal gap.
Expansion and working capital — a label a lender has to unpick
The supplier quote, the build-out estimate, the payroll weeks — a list it can check
Rule 3
Say what you are putting in
Owner equity in the purchase is read as commitment, and on SBA and acquisition files it is often required.
Where that applies: do business loans require a down payment
Equity requirements on SBA files are set by the participating lender under SBA rules. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
Attach the evidence for each line
- A supplier or vendor quote for an asset
- The contract or purchase order behind a receivable
- The lease or purchase agreement for premises
Step 4. Build the debt schedule and reconcile the financials
A lender does not take your financials on trust. It reconciles them, and the reconciliation is the whole exercise.
- 1Prepare first
Debt schedule
What it showsEvery existing obligation, its balance, payment and holder
Checked againstThe debits visible on the bank statements
- 2
Filed business tax returns
What it showsRevenue and profit a third party has already seen
Checked againstThe returns the lender can verify
- 3
Year-to-date profit and loss
What it showsThis year's trading
Checked againstThe returns, and the bank statements
- 4
Balance sheet
What it showsWhat the business owns and owes
Checked againstThe debt schedule and the lien searches
- 5
Bank statements
What it showsWhat actually happened in the account
Checked againstEverything above
What breaks a reconciliation
- Revenue on the profit and loss that never appears as deposits
- A debt schedule missing an obligation the statements show being paid
- Interim figures that contradict the filed return
- Personal and business money mixed in one account
Each of those costs more credibility than a weak month, because each suggests the file cannot be relied on. The debt schedule is often the document that is wrong, and it is the easiest one to check, so prepare it honestly.
Step 5. Project forward from the bank statements
Projections are judged on the join with your current account, not on how far ahead they go.
Convention is month by month through the first year, then annually across the length of the financing you are asking for. A projection that opens well above the account's current reality is read as an error, not as ambition. Build the bridge from the statements to the plan explicitly.
One worked bridge, from what the account shows to what the plan claims.
Illustrative example, not an offer.
Figure
- Average monthly deposits, last three months
- $42,000
- The same, annualised
- $504,000
- Year-one revenue in the projection
- $720,000
- The gap you have to explain
- $216,000
- The explanation
- Two new vans billing $12,000 a month each, $24,000 together, for nine months of the year
Where a lender checks it
- Average monthly deposits, last three months
- Your bank statements
- The same, annualised
- Arithmetic
- Year-one revenue in the projection
- Your plan
- The gap you have to explain
- Your assumptions page
- The explanation
- A signed contract or a pipeline a lender can verify
The gap is not the problem; an unexplained gap is. Every increase needs a cause a stranger can check.
Projections that survive a second reading
- One assumptions page: each growth figure, its cause, its source
- Costs that grow with revenue
- A first projected month close to the statements
Projections that get questioned
- A steep climb from an account that has been flat for a year
- Sales that rise while cost of sales stays still
- Growth with no named cause
- A first month far above recent deposits
Step 6. Put the new payment and a bad case in the model
Underwriting will compute both anyway. Doing it first shows the file was built by someone who expects to repay.
The new payment in the model
Include the financing you are applying for at the payment you expect, and show what is left in a normal month and in a slow quarter.
A downside column
Show the file still works with a materially slower ramp. A plan with a bad case in it usually reads as more credible than one without.
The payment you model is your estimate. Rates, fees and terms are set by the funding provider or lender that makes the offer, depending on the funding provider.
Why it matters
Underwriters compute a coverage ratio from your figures: the cash flow available against all debt payments, including the new one. If your own model never shows that line, the reader has to build it, and a figure built without you tends to be conservative.
Step 7. Write the management and market sections last
Underwriters do not start at page one. They look for the answer to one question, whether this will be repaid, and go where that answer lives.
- 1
The one-page summary
What you do, how much, what it buys, how it is repaid.
- 2
The use of funds
That the amount matches a real, costed need.
- 3
Historical financials and tax returns
That the business already produces the cash flow you describe.
- 4
Bank statements and the debt schedule
That the financials and the account agree, and what is already committed.
- 5
Projections
That the plan is arithmetically possible, and what has to be true for it to happen.
- 6
Management and market
That someone here has done this before.
- 7
Collateral and guarantees
What backs the file if everything above goes wrong.
A plan written market first and numbers last tends to read as though the numbers were made to fit the story. Written in the reading order, the market section can only claim what the figures already support.
On SBA files, every owner of 20% or more signs a personal guarantee under SBA rules. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
Step 8. Package the documents that travel with the plan
The plan is the narrative; the documents are the evidence. On a file a lender reads closely, send them as one package.
Every lender-read file
- Three months of bank statements (four in CA, NY, FL and GA with some providers)
- Business and personal tax returns
Also asked for
- The statements complete and unedited
- A year-to-date profit and loss and balance sheet
- A debt schedule covering every existing obligation
Add, where they apply
- Entity documents, licences and ID
- Quotes or contracts behind the use of funds
- SBA programme forms
Also asked for
- Leases or purchase agreements behind the use of funds
- SBA programme forms are completed with the participating lender
- A personal financial statement, if the lender asks for one
SBA loans usually take several weeks to a few months, subject to provider approval and document turnaround; a complete package keeps them moving. A line of credit can bridge the wait, a cash-flow call. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
Step 9. Have it read cold, and check for what sinks a plan
Give the draft to someone who has not seen it. If, after one page, they cannot say what the money buys and how it is repaid, rewrite that page.
What sinks the plan: "Expansion" as the use of funds
What to do instead A costed list that totals the request
Step 3What sinks the plan: A steep projection from a flat account
What to do instead Start from the statements and explain the gap
Step 5What sinks the plan: An obligation left off the debt schedule
What to do instead Check every debit on the statements
Step 4What sinks the plan: No sentence on which cash flow repays it
What to do instead Write the repayment statement on page one
Step 2What sinks the plan: Market research in place of arithmetic
What to do instead Write management and market last
Step 7What sinks the plan: A plan sent where nobody reads one
What to do instead Send complete statements instead
Step 1
A plan helps a file; it does not guarantee an offer. The provider or lender makes the decision.
If the file comes back declined
- 1
Ask which part stopped it
A decline is usually about one thing, and many providers and lenders will say which.
- 2
Fix that one thing
If the obstacle is the business credit file rather than the plan, that is a longer fix with its own steps.
Key takeaways
- 1
Find out who reads the plan before you write it.
- 2
The one-page summary and the use of funds are read first, and every other number is checked against them.
- 3
A use of funds is a costed list that totals the request, with quotes or contracts attached.
- 4
Lenders reconcile rather than trust: the financials, the debt schedule and the statements have to agree.
- 5
Projections start from the account and name the cause of every increase.
- 6
Put the new payment and a downside case in your own model.
- 7
Send the documents as one complete package.
Frequently asked questions
In short
A business plan for a loan is a credit document: a one-page summary, a costed use of funds, historical financials that reconcile to your bank statements, a debt schedule and projections built from what the account already shows. Banks read it closely; many online funding providers decide on bank statements instead, so check who reads it first.
Do I need a business plan to get a business loan?
For many online products, no: providers in Capital Gurus' network decide on bank statements, revenue, time in business and credit. A plan is usually required for SBA loans, bank loans and startup or acquisition financing, where the lender needs the use of funds, projections and the owner's experience. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
What should a business plan for a loan include?
A one-page summary; what the business does and who buys from it; ownership and management; the market; the use of funds down to the line item; historical financials; projections with the assumptions written out; and a repayment statement showing which cash flow covers the new payment. The summary, the use of funds and the repayment statement are the parts a lender reads first.
How long should a business plan for a loan be?
Short enough that an underwriter reads all of it: one page of summary, then as many pages as the sections genuinely need, usually a modest document plus a financial appendix. Length is not evidence of effort. A long plan with a vague use of funds reads worse than a brief plan with a specific one, and narrative never replaces a reconciled number.
Do online funding providers read a business plan?
Usually not. A working-capital provider underwrites your bank statements: deposit volume and consistency, negative days, existing debits and how much revenue is already committed. Sending a plan does not hurt, but it rarely changes the outcome. Put the effort into clean, complete statements and an accurate debt schedule instead, because those are what the decision is made on.
How far ahead should financial projections go?
Month by month through the first year, then annually across the length of the financing you are asking for. What makes projections credible is their arithmetic rather than their horizon: every revenue increase traces to a named cause, and the first projected month sits close to what your bank statements already show. Include the new payment and a downside case.
What documents go with a business plan?
Typically three months of bank statements, filed business tax returns and the owners' personal returns, a year-to-date profit and loss and balance sheet, a debt schedule of every existing obligation, entity documents and government ID, plus quotes or contracts behind the use of funds. SBA programme forms are completed with the participating lender. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
Why would a business plan not help my application?
Because it answers questions nobody asked. Underwriting wants a use of funds tied to specific costs, financials that reconcile to the statements and returns already in the file, and a repayment statement. A plan heavy on market opportunity and light on arithmetic reads as missing answers, and projections that contradict the statements cost more credibility than they build.
Does a business plan help if my credit is weak?
On a bank file, rarely enough on its own, because weak personal credit weighs heavily there whatever the plan says. On bank-statement products, credit is weighed against deposits: some providers in Capital Gurus' network consider credit from 525 with 12 months in business, and meeting a minimum does not guarantee an offer. See business financing with bad credit.
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