Proper planning is an important aspect to a successful life and when it comes to doing business, it is a crucial factor in getting access to capital. While there are a few sources of capital available to commercial ventures and entrepreneurs, financing is the most common manner of funding your business capital needs. For small and mid-sized American business looking for access to capital, the United States Small Business Administration (SBA) is often the best source.
Reinvestment in America
As part of the American Recovery and Reinvestment Act of 2009, the SBA stands ready to guarantee up to 90 percent of a loan made to qualified businesses. For all the talk surrounding the tightening credit guidelines during the Great Recession, the SBA reported delivering record numbers of loan guarantees in late 2010. The increased funding is expected to continue in the next few years as the White House promotes more initiatives aimed at jumpstarting the troubled U.S. economy.
While the current outlook for business lending is positive, according to industry analysts who are following the SBA loan levels, the approval rate is highly contingent upon the meticulous completion of the loan application and especially the strength of the business plan attached. Every business owner seeking to borrow funds should keep that last point in mind: any attempt at obtaining business capital will require a solid business plan.
A Realistic Game Plan
As a government agency dedicated to keeping the American dream alive, the SBA wants to ensure that loan guarantees are issued to businesses that will truly advance the economy. To that extent, it is essential for business loan applicants to carefully write an engaging plan that proves not only their viability, but also their business acumen.
The following tips can help you write a business plan that is worthy of an SBA loan approval:
Think positively and realistically:Whether your business is start-up venture or already established, you must think about the operations and financials for the next five years. An optimistic log-term outlook looks great on a business plan, but it must be backed up by realistic expectations, particularly during the first two years immediately after funding.
Cater to niche rather than broad markets:The key to making your business plan stand out is to think in terms of specialization. Your business plan must clearly point out the prospective customers for your product or service. If you truly think that your business has mass appeal, be sure to think about exactly whom your customers will be and way in which you will be able to reach them.
Give hard evidence: When describing your business product or service, be sure to include tangible information such as marketing materials, suppliers, manufacturing processes, costs, legal agreements in place, benefits to the consumer, etc. If the possibility of your business success depends on future research and development efforts, be sure to mention those, along with a timeframe for completion.
Highlight your business know-how: The market analysis portion of your business plan is the best yardstick to measure your business acumen. From the industry description and outlook to the target market and competitive analysis, you must do your homework and prove to the lender that you are clearly aware of all the implications applicable to your business.
Retain professional services: Once you have considered all of the points above, you may want to employ a professional business plan writer to turn your detailed information into a “work of art.” Business plan writing firms often employ industry professionals who are well versed in many of the facets a business plan entails. Hiring a professional business writer may not only help you expedite the creation of your plan, it could also provide you with a valuable learning experience.
Since 1953, the SBA has been celebrating the American entrepreneurial spirit by offering loan guarantees to business owners looking for capital. SBA loan guarantees are offered through a large network of lenders that provide the actual funding of the business loans. It is important for business loan applicants to understand that the SBA itself does not provide the capital; it rather issues a government-backed guarantee on a portion of the loan. These loan guarantees are the lifeblood of the business loan industry in the United States; without the SBA the American business climate would be easily less than tepid.
Liam Murphy is a loan consultant and content contributor for keyinsurancequotes.com, a non-profit consumer advocate insurance forum. The site also includes premium quotes from every major company, including mortgage protection insurance quotes, life insurance quotes, and many more.
