A business plan prepared for financing should do more than describe a business. It should present a clear and credible case for why the business is positioned to succeed, how it will generate revenue, how much financing it needs, how the funds will be used, and how the business expects to generate sufficient cash flow to meet its financial obligations.

A quality financing-oriented business plan should be based on accurate information, reasonable assumptions, supporting research and financial projections that are consistent with the company's overall strategy.

While the exact format can vary depending on the business and the requirements of the lender or funding source, a traditional financing business plan commonly includes the following components.

1. Executive Summary

The Executive Summary provides a concise overview of the entire business plan. It should quickly communicate what the company does, who it serves, what makes the business competitive, its financial objectives and the purpose of the financing request.  Although the Executive Summary appears first, it is often best developed after the other sections of the business plan have been completed.

2. Company Description

The Company Description explains the business in greater detail. It should identify the company's legal structure, ownership, location, history, products or services and primary business activities.

This section should also explain the problem the business solves, the customers it serves and the competitive advantages that may contribute to its success.

3. Mission, Vision and Business Objectives

This section establishes the company's mission, vision and measurable objectives.

The mission describes what the business is intended to accomplish. The vision describes where the company wants to go over time. Business objectives translate those concepts into specific goals involving revenue, customers, market expansion, profitability, operations or other measurable outcomes.  For a financing request, these objectives should be consistent with the company's financial projections and intended use of funds.

4. Products and Services

The Products and Services section explains what the company sells and the value those products or services provide to customers.

It should address:

• Products or services offered
• Pricing
• Target customers
• Competitive advantages
• Revenue-generating activities
• Product or service development
• Intellectual property, where applicable
• Future products or services

The objective is to help the lender understand what the company sells, why customers will purchase it and how those sales generate revenue.

5. Industry and Market Analysis

The Market Analysis demonstrates that the business owner understands the industry and market in which the company operates.

This section may address:

• Industry characteristics
• Market size
• Industry trends
• Target market
• Customer demographics
• Customer needs
• Geographic market
• Market demand
• Competitors
• Competitive strengths and weaknesses
• Barriers to entry
• Opportunities and threats

A strong market analysis should be supported by credible research rather than assumptions alone.

6. Competitive Analysis

The Competitive Analysis identifies the company's primary competitors and explains how the business intends to compete.

This section should answer questions such as:

• Who are the company's major competitors?
• What products or services do they provide?
• How are they positioned in the market?
• What are their strengths and weaknesses?
• What makes this business different?
• Why would customers choose this company instead?

A lender wants to understand not only that a market exists, but also whether the business has a realistic strategy for obtaining and retaining customers.

7. Marketing and Sales Strategy

The Marketing and Sales Strategy explains how the business intends to attract customers and generate revenue.

It may include:

• Branding
• Advertising
• Digital marketing
• Social media
• Website strategy
• Referral programs
• Direct sales
• Partnerships
• Lead generation
• Customer acquisition
• Customer retention
• Pricing strategy
• Sales process

The marketing and sales strategy should connect directly to the company's revenue projections. If the financial projections assume a particular level of sales, the business plan should explain how the company intends to generate those sales.

8. Operations Plan

The Operations Plan explains how the business will actually deliver its products or services.

Depending on the business, this may include:

• Business location
• Facilities
• Equipment
• Technology
• Suppliers
• Inventory
• Production
• Service delivery
• Transportation
• Vendors
• Subcontractors
• Operating procedures
• Quality control
• Capacity

The purpose is to demonstrate that the company has a realistic plan for converting its resources into products, services and revenue.

9. Management and Organizational Structure

The Management and Organization section identifies the people responsible for operating and managing the company.

It should generally describe:

• Ownership
• Legal structure
• Management team
• Key employees
• Organizational responsibilities
• Relevant experience
• Professional qualifications
• Organizational chart
• Outside advisors or professional support

Resumes or biographies of key personnel may also be included, particularly when the experience of the management team is an important factor in the business's ability to succeed.

10. Personnel and Staffing Plan

The Personnel Plan explains the company's current and anticipated staffing requirements.

It may identify:

• Current employees
• Key management positions
• Future hires
• Compensation
• Payroll requirements
• Employee responsibilities
• Hiring timeline
• Staffing costs

Personnel assumptions should be consistent with the company's operating plan and financial projections.

11. Funding Request - Request For Capital

The Funding Request clearly explains how much financing the business is seeking and what the financing will be used for.

A strong funding request should identify:

• Total amount requested
• Type of financing requested
• Purpose of the financing
• Specific uses of funds
• Equipment purchases
• Working capital
• Inventory
• Real estate
• Construction or improvements
• Marketing
• Payroll
• Technology
• Debt refinancing, when applicable
• Other capital requirements

The SBA recommends that a funding request clearly explain the amount of financing needed and how the funds will be used. A financing request should be specific. Instead of simply stating that the business needs "$250,000 for growth," the plan should explain what the $250,000 will accomplish.

12. Use of Funds - Use of Capital Explanation

The Use of Funds section provides a detailed breakdown of how the requested capital will be deployed.

13. Historical Financial Information

For an established business, historical financial information helps demonstrate the company's actual financial performance.

Depending on the circumstances, this may include:

• Income statements
• Balance sheets
• Cash-flow statements
• Accounts receivable information
• Accounts payable information
• Existing debt
• Tax returns
• Revenue history
• Expense history

Historical financial information allows a lender to evaluate the company's financial performance and compare past results with future projections.

14. Financial Projections

The Financial Projections section estimates the company's expected financial performance after implementing the business plan.

Depending on the business and financing request, projections may include:

• Projected income statements
• Projected balance sheets
• Cash-flow projections
• Sales projections
• Expense projections
• Capital expenditures
• Break-even analysis
• Debt-service considerations
• Monthly or quarterly projections
• Multi-year forecasts

The SBA recommends that financing-oriented business plans provide a prospective financial outlook and that first-year projections can be presented with greater detail, such as monthly or quarterly projections. 

15. Financial Assumptions

Financial projections are only as credible as the assumptions behind them.

A strong business plan should explain the major assumptions used to develop the projections, such as:

• Pricing
• Unit sales
• Customer growth
• Revenue growth
• Cost of goods sold
• Labor costs
• Rent
• Insurance
• Marketing expenses
• Equipment costs
• Interest expense
• Hiring plans
• Seasonal fluctuations

The purpose is not to predict the future with certainty. It is to demonstrate that the financial projections are based on reasonable, understandable and supportable assumptions.

16. Break-Even Analysis

A Break-Even Analysis identifies the level of sales at which the company's revenue covers its costs.

It can help demonstrate:

• How much the business needs to sell to cover expenses
• When the business may become profitable
• The relationship between pricing and costs
• The level of sales needed to support the company's operating structure

Break-even analysis can be particularly useful when evaluating a startup, expansion or major investment. The SBA identifies break-even analysis as a useful tool for estimating profitability and understanding startup and operating costs.

17. Repayment Strategy

For a debt-financing request, the business plan should explain how the company expects to repay the financing.

This may include discussion of:

• Projected operating cash flow
• Revenue growth
• Expense management
• Debt-service capacity
• Existing obligations
• Timing of expected cash flow
• Other sources of repayment, when applicable

The goal is to demonstrate that the requested financing is connected to a realistic business strategy and that the company has considered how the resulting debt will be serviced.

18. Risk Analysis and Contingency Planning

A credible business plan should acknowledge that every business faces risks.

Potential risks may include:

• Changes in customer demand
• Competition
• Economic conditions
• Supply-chain disruptions
• Labor shortages
• Regulatory changes
• Cost increases
• Technology changes
• Key-person dependency
• Unexpected operating expenses

The plan should explain how management intends to identify, manage and respond to significant risks.  Acknowledging risks does not necessarily weaken a financing request. In many cases, it demonstrates that management has thoughtfully evaluated the business and has considered potential challenges.

19. Implementation and Action Plan

The Implementation Plan converts the business strategy into specific actions and milestones.

It may identify:

• Major objectives
• Action items
• Responsible individuals
• Target dates
• Required resources
• Performance measurements
• Key milestones

This section demonstrates that the business plan is intended to be used as a management tool rather than simply created for presentation to a lender.

20. Supporting Documents and Appendix

The Appendix provides supporting documentation that may be useful to a lender, investor or other reviewer but would make the primary business plan unnecessarily long.

Depending on the business and financing request, supporting documents may include:

• Owner or management resumes
• Licenses
• Permits
• Contracts
• Leases
• Letters of intent
• Product photographs
• Organizational documents
• Patents or trademarks
• Detailed financial schedules
• Tax documents
• Market research
• Equipment quotations
• Construction estimates
• Other supporting documentation

The SBA identifies items such as resumes, licenses, permits, patents, legal documents and contracts as examples of materials that may be appropriate for an appendix.