A business plan written for investors and a business plan written for a lender are different documents, and submitting the wrong one is a common reason for a decline. An investor is buying upside — they want to know how big this could get. A lender is buying certainty of repayment — they want to know how you’ll service the debt if things go averagely, and what happens to their money if they don’t.
Write for that reader and the structure follows.
What a lender is actually assessing
Underwriting comes down to a few questions, usually framed as some version of:
- Character — your track record and credibility.
- Capacity — can the cash flow service the repayments?
- Capital — how much of your own money is in this?
- Collateral — what secures the loan if it fails?
- Conditions — the market and the purpose of the loan.
Every section of your plan should answer one of those. Anything that doesn’t is decoration.
The structure
1. Executive summary (1 page, written last)
State plainly: who you are, what the business does, how much you want, exactly what it’s for, over what term, and how it will be repaid. A lender should be able to read this page alone and know whether to keep going.
Do not open with vision. Open with the ask and the repayment source.
2. Business description
What you sell, to whom, since when, and the legal structure. Include registration details, ownership, and how long the business has been trading. If you have trading history, this is where credibility starts.
3. Management and team
Who runs this and what they’ve done before. Lenders weigh relevant operating experience heavily, particularly for smaller loans where the business is the founder. Include a short, factual bio each — not a résumé.
4. Market and customers
Enough to show you understand demand, and no more. Two things matter to a lender:
- Evidence of actual demand — existing customers, contracts, recurring revenue, pipeline.
- Customer concentration. If one client is 60% of revenue, that’s a repayment risk and they will find it. Address it before they raise it.
Skip the total-addressable-market slide. A lender doesn’t get upside from a big market; they get repaid or they don’t.
5. The offering and operations
What you sell, at what margin, and how it’s delivered. Gross margin is doing real work here — it’s what turns revenue into the cash that services debt.
6. Sales and marketing plan
This section fails most often, because founders write aspiration instead of mechanics. A lender wants to see that revenue arrives through a repeatable process, not hope.
Be concrete: which channels produce customers today, what each costs, and what you’ll change with the loan. If your growth depends on channels that only cost money when they produce — referrals, partner and affiliate programs — say so, because performance-priced acquisition is genuinely lower-risk from a repayment perspective than fixed ad commitments (how the economics differ).
7. The financials — the section that decides it
This is what gets read closest.
Historical statements — two to three years of profit and loss, balance sheet, and cash flow if you have them. Accurate and reconciled to your tax filings.
Projections — three years, monthly for year one, then quarterly or annual. Three things matter more than the numbers themselves:
- Assumptions stated explicitly. Every projection line should trace to a stated assumption a reader can argue with. Unexplained hockey sticks read as fantasy.
- Conservatism. Present a base case you can defend, not a best case. Lenders discount optimistic projections automatically, so optimism costs you credibility without buying anything.
- A downside scenario. Show what happens at 70% of projected revenue and demonstrate you can still service the debt. This single addition does more for lender confidence than any other section, because it’s the exact question they’re privately asking.
Debt service coverage. Compute it explicitly: operating cash flow divided by total debt service. Lenders have thresholds; showing that you know the metric and clear it comfortably signals you understand what you’re asking for.
8. Use of funds
A line-item table. “$120,000: $70k equipment, $30k inventory, $20k working capital.” Vague answers — “growth” — get declined, because the lender can’t assess whether the spend produces the cash flow that repays them.
9. Repayment plan and security
State the source of repayment in cash-flow terms, the proposed term, and what you’re offering as collateral or personal guarantee. Being explicit here reads as competence, not weakness.
10. Appendices
Bank statements, tax returns, contracts, licences, key agreements, and founder CVs. Have these ready before you apply — delays in producing documents are read as disorganisation.
The mistakes that get plans declined
- Writing an investor pitch. Vision, market size, and 10x returns don’t address repayment.
- Projections with no assumptions. The fastest way to lose credibility.
- Ignoring the downside. If you don’t model it, the lender assumes you haven’t thought about it.
- Vague use of funds.
- Hiding a weakness. Customer concentration, a bad year, a personal credit issue — raise it yourself with an explanation. They will find it, and finding it themselves is much worse.
- Numbers that disagree across sections. Your summary, your projections, and your appendices must reconcile exactly.
A note on whether debt is the right instrument
Debt suits businesses with predictable cash flow and a specific, revenue-generating use of funds. It suits pre-revenue startups with uncertain models badly — the repayment schedule starts before the revenue does, and a personal guarantee turns business risk into personal risk.
If you’re an early SaaS with little revenue, look hard at the alternatives before signing: non-dilutive grants (common in Europe and India), revenue-based financing that flexes with your actual income, or simply growing through channels that cost nothing until they produce. A referral or affiliate program has the useful property of being pure variable cost — you pay only out of revenue it generated, which is the opposite risk profile to a fixed monthly repayment.
FAQ
What does a lender look for in a business plan?
Evidence you can service the debt: historical financials, conservative projections with stated assumptions, a clear line-item use of funds, a downside scenario, and an explicit repayment source and security.
How long should a business plan for a loan be?
Typically 15–25 pages plus appendices. Depth in the financials matters far more than length elsewhere — the executive summary and the projections carry most of the decision.
Should projections be optimistic or conservative?
Conservative and defensible. Lenders discount optimistic projections automatically, and a base case you can justify — plus a downside scenario showing you can still repay — builds more confidence than a high forecast.
More financing and growth strategy is in the growth & pricing hub.