How Can I Prepare My Business To Apply For A Loan During The Pandemic?
If you are one of the thousands of businesses in America impacted by the COVID-19 pandemic, you are likely focused on adapting your business model or some manner of a recovery plan that will help you reestablish yourself, get you back to business, and out of the red.
If life was proceeding as usual—without the complications of pandemic shutdowns—you might not have the same concerns about borrowing. With predictable cash flow, an excellent credit rating, and steady growth, you could focus on building your business rather than merely surviving.
Unfortunately, “business as usual” is a bit of a pipe dream these days. Unless you were considered an essential service or were already operating in the virtual realm, you are probably in the same boat as more than 80 percent of small businesses in the USA struggling to stay afloat amid the changes.
The issues are varied across the board. Mass layoffs, supply chain disruptions, factory shutdowns, and closed trade borders compound the situation, leaving some businesses scrambling to find new suppliers or change their business model to better meet their customer’s needs.
Preparing for The Future
For some, our new reality has been a blessing of sorts. Companies that could do so managed to immediately pivot their employees to work from home. Others altered their production focus to meet the public’s changing needs, like distilleries that switched from producing beverage alcohol to making hand sanitizer, or restaurants that stayed open by focusing on takeout and delivery.
In many of these examples, it was a way to keep the doors open and prevent having to lay off all their employees, but it wasn’t always profitable. Time will tell, but hopefully, the goodwill generated will pay off in fortitude, if nothing else.
Agility is a common attribute of successful companies. Your ability to not just survive, but thrive despite the challenges is something that your customers, vendors, and potential lenders will recognize and reward.
Is It Time to Apply for a Business Loan?
Whether you pulled ahead or took a hit during the shutdowns, it’s time to look to the future. Since your business model has likely changed, it would be prudent to revisit and revise your business plan.
If applying for a loan is part of your recovery and growth strategy, you’ll want to prepare yourself for success so you can hit the ground running, and developing a business plan that considers current challenges is a critical step.
Incredible Bank is here to help, and today we’ve got some tips and suggestions to ensure your loan application has the best possible chance of success.
We have developed a COVID-recovery focused business plan template that will help you organize your ideas. Once complete, you will have an excellent framework with which to move forward with your loan application.
We’ll go through it together, section by section, and dive deeper into the information a prospective lender will want to see.
COVID Business Plan Template
Your business plan can be formatted in any number of ways. Some companies prefer a PowerPoint format as it is easy to navigate and lends itself to nice visuals, but PDF is acceptable as well. Your choice is up to personal preference, but be sure your final product holds your formatting and reflects your branding. First impressions are important!
Section I: Business Summary
This is the introduction and overview of your business plan. Here is where you will identify the nature of the business, who the owners are and who makes up the leadership team, and provide a brief discussion of the company’s historical performance.
You will wrap up your summary by describing the current status of your business operations. Be realistic, pragmatic, and to-the-point. Bankers appreciate the truth because it has a habit of proving itself in the numbers – don’t whitewash the situation; just stick to the facts.
Section II: Current Business Position
Briefly summarize how your business has been affected by COVID-19, both financially and operationally. Some points you might consider:
- Have you had to lay off staff?
- Have you closed physical locations?
- Have you had to cease any part of your operations because of various restrictions or loss of demand?
- How has new technology helped you stay afloat?
- Have you had to develop new workflows to facilitate remote working?
These are just some of the considerations, but it’s a place to start. Consider this as an overview, as it leads into the next section, where you can dig a little deeper.
Section III: Ongoing Adaptations
This section explains which changes have been made to the historical or current business model that will support your recovery and future growth. Here is where you can expand on the concepts and ideas you put forth in the previous section and discuss how they support your plans for growth and recovery.
List any new revenue streams that will support your projected growth in both the short-term and long-term.
Itemize any contracts or other business that you have already put into place – anything that will help stabilize and grow your company out of the current environment. Focus on long-range plans here and be mindful of sustainability.
Section IV: Potential Challenges
What are some of the ongoing issues that could potentially come up that might conflict with your projections?
Your prospective lender will want to know how you intend to meet these challenges, should they arise. Explain in as much detail as possible what you will do to prepare. Ultimately, your lender wants to know that you’ve done your homework and that you’re being realistic.
Section V: Projected Income and Assumptions
Summarize your next 12 and 24 months of income and expenses. These numbers can be pulled from your projections.
Explain how the numbers were calculated and what facts, contracts, deals, and trends support your projections.
Section VI: The Financing Ask
Articulate the current loan under request. Explain why the loan is needed, what the funds will be used to finance, and how this debt is essential to your growth plans. It is your chance to tie all the information you’ve previously offered back into the ask to lend weight and substantiate.
We have all been through a very volatile year, but the race is far from over. Incredible Bank is dedicated to small business success, and we would love to be a part of yours. When you’re ready to move forward, give us a call. It’s time to rediscover your incredible.