What Lenders and Investors Look For in a Business Plan

A business plan is read by different people for different reasons. A bank wants to know it will be repaid; an investor wants to know the business can grow many times over. The same plan needs to speak to each. This guide explains what each audience looks for.

What Lenders Look For

• Repayment capacity: steady cash flows that comfortably cover repayments.
• Track record: historical performance supporting the projections.
• Security: assets and guarantees backing the loan.
• Promoter commitment: the owners' own money in the business.
• Conservative assumptions: lenders prefer realism over ambition.
• Ratios: debt service coverage, leverage and liquidity within their norms.

What Investors Look For

• Market size: whether the opportunity is large enough.
• Traction: evidence customers want the product.
• Unit economics: whether each customer is profitable over time.
• Growth potential: a credible path to scale.
• Team: the people who can execute.
• Use of funds: what the money achieves and which milestones it reaches.
• Return potential: how they might exit.

Common Elements Both Want

• A clear explanation of the business and its customers.
• Honest numbers that reconcile to the accounts.
• Awareness of risks and how they'll be managed.

Tailoring the Plan

1. For lenders, lead with cash flow, security and repayment.
2. For investors, lead with market, traction and growth.
3. Use one underlying model, presented differently.
4. Keep the numbers consistent between versions.

Common Mistakes

• Unrealistic growth with no explanation.
• Numbers that don't match the audited accounts.
• Ignoring competition.
• Vague use of funds.

Getting Help

Think Filing helps businesses prepare plans and models tailored to lenders and investors.