How to write a loan business plan in Nigeria
How to write a loan business plan in Nigeria
When seeking a loan for business purposes in Nigeria, there are a number of factors that come to play in determining how easy you can access funding and whether or not you are even considered in the first place. In this article, we will be talking about how to write business plan for the purpose of securing a loan in any of Nigeria’s financial institutions. Getting a loan in a Nigerian bank can be pretty easy, or it can be difficult, depending on a number of factors, some of which we will look at today.
The business plan is an important document which any bank, financial or lending institution, will always require or ask for when you seek business financing from any of them – this isn’t only a practice with the Nigerian lending institutions alone but it is a general practice that obtains world over. So, if you are considering a bank loan for any reason, it only makes sense to also start thinking about having a business plan to back your loan application up – and you should do this for a number of important reasons which we will talk about shortly.
Why do you need to create a business plan when seeking a loan?
Well, the truth is, when seeking a loan from a corporate financial institution, there are certain metrics they want to check about how healthy your business is, and how prosperous it promises to be. All of these important metrics they need to see are the exact same things that a very good, well-written business plan provides, sometimes at a glance. What are some of these metrics, to be specific?
- Feasibility of your business idea: this is most definitely will be required if your business is a startup or an idea that is about to start and have not been in operation. A feasibility simply talks of whether your idea is a good one that should be invested in, or a bad one that should not be invested in. Any serious lender is more interested in protecting his actual money investment than being moved by whatever dividends your business promises, or whatever interests he is charging you on the loan you were given.
- Profitability of your idea: Another important thing that any lender wants to check very seriously is profit generating capacity of your business idea. An idea may be good but the owner of the idea may not have figured out a business model that helps him make profits from the business. This is particularly important for loan-giving institutions because the profitability, among other things, is the strongest predictor of your ability to pay back the money you are borrowing.
- Legitimacy of your business idea: Your business might have shown a potential to generate a lot of money such that it can even pay back the lender 100% interest in multiple places, but any sane and smart lender still wants to know whether your business idea violates any government, organizational, or social policies – or something. No financial institution will associate with any business idea that can spark legal issues as that will be both dangerous for their reputation, as well as mean their inability to recover the loan, if something goes wrong.
Importance of a business plan when seeking a loan
Most generally, having a business plan ready ahead of seeking a loan shows to lending institutions that you are prepared and ready, and in some cases, they take it as a symbol of responsibility on the part of the business owner. It also makes the assessment of your business’ eligibility very easy and fast. One big secret I can probably tell you is that, if you have no business plan in place before applying for a loan, and it took the bank to tell you to make one, most likely (and this comes with up to about 85% of accuracy), you won’t get the loan. However, if your business plan predates your loan application, and it is submitted along with it the first time, you are in a good case. A business plan may not always guarantee that you will get a business loan or financing but it puts you in a positive rating with the lending institution in the immediate, and every other consideration will only build on that.
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How to write a loan business plan in Nigeria
How to write a loan business plan in Nigeria
You should begin by arranging your business plan document into the following important parts which will form the framework or a guideline for your entire writing. Ensure that you follow this structure and you do justice to each section when writing your business plan.
- Executive summary
This is a very important part of our business plan document as it is probably where your assessors, the financial or loan granting institution, will read first. It is a summarized or an abridged version of what is contained in the main document. It is what the assessors read to determine how sensible or welcome your idea is – and from there, they determine whether it is worth anything reading the rest of the document or not. Although you will present the executive summary first, it ought to be written last, after all other sections have been written, since it is the main parts of the document that must be summarized to produce the executive summary.
From the foregoing, it is very clear that an executive summary must be sensible, simple, compelling and written to include ALL the details that the assessors expect to see.
- Company description
This is where you will describe what your company is and does. Again, you must use convincing and compelling words and languages for your descriptions here as your goal is to sell your company to the funders in a good light. That doesn’t mean you lie about what is not, but you must learn how to project the positive things about your business. Focus on the strength of your company, products and service, your team, and so on. You should include important information about your business, including your vision, mission, goals, aims and objectives, talk about who your customers are and how you plan to serve, or are serving them.
- Market and competition analyses
Every business or product operate within a given and specific market and the business principal must know that market and understand it so well. Here, you want to show to the lenders that you have a solid understanding of your industry by talking about the trends and important verifiable data within your industry, why you think you can carve a space for yourself and be distinctly successful within that industry.
Talk about the other players within the industry who are going to be competing with you. How do you compare when you weigh the strength of your business against theirs? Your primary goal is to show your lenders how your business is performing relative to that of your competitors – are you performing lower, equally, or better than businesses within your industry who are probably selling the same (or similar) products and services and are targeting the same set of customers that you are targeting with your products and/or services
- Your products and services, marketing plan and management plan
In your business plan writing, it I important to elucidate on your product and services – features and benefits to the target customers. You should also state the marketing plans that you have in place. This is simply your plan on how you plan to get the word out to your target customers so they are aware that your product exists as a solution to an identified problems that they are well acquainted with. You should also briefly discuss the management structure that your business runs. This is where you’ll speak about the people you are working with and the qualities that make them suitable for the roles you have accorded them within your business structure.
- Your financials
The financial aspect of your business plan document is one of the most important section when seeking for a loan. Here you must state clearly how much money you need and for what purpose. Also very important is your proposed pay back plan. You must be able to show a realistic and sensible revenue projection and profitability schedule that not only tells the lenders that you know what you are doing, but also tells them you have the payback capacity and plan.
If you need a service of a Professional Business plan writer, then Dayo Adetiloye Business Hub is the place to go Call or WhatsApp us now on 081 0563 6015, 080 7635 9735, 08113205312 or send an email to dayohub@gmail.com and we will solve any of your business plan problems.
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Call or WhatsApp us now on 081 0563 6015, 080 7635 9735, 08113205312 or send an email to dayohub@gmail.com and we will solve any of your business problems.
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