Do I Need A Business Plan To Get A Small Business Loan?
Small business owners need some type of plan to help focus strategy, assign and track responsibilities, manage money and more. However, a formal business plan can be an overwhelming and time-sucking document to put together, especially when you’re working hard to grow your business.
Business Plans and Funding
Small business owners who spend hours to craft a perfectly-articulated business plan expect the effort will pay off with better odds of getting funded. But they’re probably fooling themselves. That’s the finding of a study conducted at the University of Maryland’s Robert H. Smith School of Business. Professors David Kirsch and Brent Goldfarb, along with doctoral student Azi Gera, studied business plans of more than 700 companies.
Their conclusion is that the content of the business plans does not predict which businesses get funded. That doesn’t mean writing one is a worthless process. However, the study showed that a business plan won’t bring in the money.
Traditional Bank Requirements vs. Alternative Lenders
If you are approaching a traditional bank for a loan for a small business, your loan officer may require a business plan to look more favorably on your application.
However, if you’re using an alternative small business funding lender, like SmartBiz, you don’t need to present this document at all.
Evan Singer was recently interviewed about the requirements to get an SBA loan through the SmartBiz website. He said, “SmartBiz doesn’t require a business plan or projections, which is one of the ways it differs from many other SBA lenders.”
What are the documents required by SmartBiz to secure funding? You’ll need to collect a variety of personal and business information. Find out specifics and learn more about our lending requirements on the “How SmartBiz Works” page.
Why Create A Business Plan At All?
Even though you don’t always need a business plan to get funding, there are many reasons to create a business plan for your small business. A business plan can define a new business along with objective and programs need to achieve those objectives. Additionally a business plan can be used to evaluate a new product line, create a regular business review and course correction process, define agreements between partners and set a value on a business for sale or legal purposes.
To learn more about what a formal business plan should include, visit the Small Business Association website. Are you a small business owner seeking funding to expand your business? Visit the SmartBiz website today and find out if you’re qualified for an SBA loan in 5 minutes or less. Use the promo code “Blog” when you register and get ready to grow!