Pitching Your Business Idea to a Bank


You’ve got a great business idea but you don’t have the funds to start it up? Do you know how to approach banks so that you are able to secure a loan? If not, here are some tips that might help you do that.

For most entrepreneurs that do not possess the necessary capital to finance their business idea, the bank is the first option they turn to. And with good reason. Still, many future entrepreneurs approach the process of obtaining a bank loan with a great deal of confusion or anxiety.

While most up-and-coming entrepreneurs would be happy to leave out the creation and presentation of financial forecasts along with a solid business plan, it’s a no-brainer that these are the most important aspects of which your bank business manager will be interested in. Still, the good news is that with a lot of preparation, you could significantly increase your chances of obtaining a bank loan and building that amazing company.

At this point, the business plan will become the top star of your business idea and the most important document you could present. Moreover, it is an awesome way of getting started because it will require you to present your idea, the opportunity, your goals and the strategy you will apply to achieve them. In addition, as an entrepreneur and future business owner you must believe that your business idea is viable from a financial standpoint. Need a bit of help? Check out our section on The Business Plan.

So let’s continue. To ensure that the idea is not only attractive for the banker but also financially viable, your business plan must answer some questions such as:

  • What is your Business model?
  • What are your objectives and the strategy to achieve them?
  • Where do you see your company in the market in the long run?
  • Who are your potential customers and how do you plan to approach them?
  • Who is your competition? How do you plan to differentiate from your competition?
  • How much revenue will you require to launch a company and how will you utilize it?

In my opinion, no entrepreneur should launch a start-up under-capitalized. Therefore, it is safe to say that you need to know your options. Maybe, you will have to cover the costs of setting up, equipment, materials and even bills and wages before you will generate enough money to make your newly founded company profitable.

The plan must show for what purposes the capital is intended, how you will spend it and how you plan on repaying the loan. Moreover, you should include other details on any degree of security you could offer lenders (either business or personal assets), but also revenue and income sources. Plus, you should present a cash-flow, both profit and loss, as well as a sales forecasts for the next 3 to 5 years.

If you’re still not 100% percent of what you should do, maybe you should take some time and speak to a manager of a local bank that can offer you valuable advice. Also, there is nothing you can lose if you present the business plan for the first time to that person. You already have a relationship with that person so why not take advantage of it?

How to prepare yourself to respond to the bank’s questions

Remember that the main objective of the bank is to help businesses while also getting their money back with an interest. Having an in-depth understanding of your cash-flow is extremely important. Most times, when banks ask questions that will help them determine where the revenue comes from, they soon see if this is true or false.

If you need help with writing your business plan you can always talk with a business consultancy company that offers this specific type of service.

Don’t get into over complicated matters. If you talk to the bank in a sincere and straight to the point manner, they will have a real understanding of both your goals and the main areas your business will cover. Banks could also be considered as a great source of free information, while also offering guidance on all areas of your financial needs.

To avoid leaving the bank manager with the impression that he/she’s being sold on, it is recommended that you don’t use the hard pitch. Also, it is important to not be on the defensive. Rather, you should carefully pay attention to the feedback he/she is offering you. And also, prepare yourself for leaving the office while having a variety of concerns you’ll need to touch upon. If that is the case, don’t consider it as a “NO”. It’s just that your plan may require some small improvements before the bank offers to lend you the money. In most cases, the person interviewing you and assessing your business plan does not have the power to sign off the loan. In turn, they will have to pitch the business idea themselves. That is why the need to have a solid understanding of what you and your future company are all about.

The most common mistakes entrepreneurs commit

When entrepreneurs hope to secure that all-important bank loan, one of the fundamental mistakes they commit is that they go in too early. If you present the first draft of the business plan to the bank manager, your business idea is destined to fail.

So make sure you have the basics covered:

  • Are the costs in line?
  • Will the profits help you pay back the bank loan?
  • Am I willing to borrow money based on this business plan?

Last but not least, avoid rushing things. You need to stay confident and believe with all your heart in your business idea. Setbacks and doubts will arise whether we want to accept it or not, but by keeping things simple and compiling as much info as possible will help you stay on track.

Being your own boss can be one of the most rewarding and thrilling experiences you will ever live. Regardless of how great a business plan is on paper, angel investors or investors in general are more interested in investing in people.

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