Do I Need a Business Plan to Get a Loan?

In the 知识中心, we know how important 商业计划 are to getting a loan for a farming operation or agribusiness. Because of its importance, we offer multiple courses on the process of business planning. 

Do I need a business plan to get a loan? Business plans become extremely important if you intend to secure operation financing. Loan officers often ask for the objectives and goals of your operation. A written business plan is the most effective way to communicate your goals in all aspects of your agricultural operation. 

Learn how to write a business plan for a loan by getting a better understanding of what lenders look for in a business plan. Below is their input on the topic.

知识中心: What do you wish customers knew about 商业计划?

卡罗: 商业计划, 虽然名义上很好, is not written in stone; it's just a strategy and, 随着经济的变化, strategies must be adapted for plans to reap results.

安东尼: It is essential to have a WRITTEN business plan. Most customers have a plan in their head, and it takes time to get the plan from their head onto paper. A written business plan communicates the clear direction of an operation and is beneficial if the customer is obtaining financing needs for their operations. The loan officer and other departments will read and review the written plan. A business that has been in operation for several years can provide tax returns in which we can review trends. 然而, if they are looking to expand or change their operation, a plan would be a clear communication tool to make financial projections and determine if their change or expansion would be viable.

知识中心: In your opinion, what is an essential section of a business plan?

卡罗: 现金流. A business is no different than a home budget; you must have a reserve or at least qualify for a good line of credit!

安东尼: Producers often know what they can get for their products. 然而, many don't know their cost of production. I think the business plan's most essential section is knowing your fixed and variable expenses. Knowing your fixed and variable expenses provides producers with a cost of production and what is needed for the owner to operate at break-even. Suppose the business has multiple enterprises; attempt to break each enterprise down into individual businesses. 是的, 多样化是好的, but we often see producers putting a lot of time into an enterprise that takes the profits from a portion of the business that doesn't take as much time. 

知识中心: Share your top 5 things to include in a business plan:

卡罗: 

1. 企业会有现金流吗? Are you more dependent on the people or the product?
2. 公司详情, including the nature of the business, 产品/十博官网手机版官网下载提供, and the need for such products/services.
3. What is the owner's sales or marketing strategy?
4. How will the company be managed?
5. Customer service strategy and philosophy. 

安东尼: 

1. Who are the managers and the employees of the business?
2. 营业地点.
3. What products will be sold and how (what markets)?
4. A projection of income from the sold products.
5. 费用明细表.
6. Risk management strategies and backup plans. 

A written business plan explaining all aspects of a farming operation effectively communicates your business to lenders. Often, a plan is not written down on paper but is in the head of the managers. Taking the time to put your business in writing will save time in the future, help you communicate your business to lenders, and help with business decisions.

Learn more about business planning with the 知识中心. 访问我们的 Ag课程页面 to view our available business planning courses. You can also access multiple farm management tools and resource in our Agricultural Business Toolkit 叫做《从头开始.

还有其他问题吗?? Reach out to the 知识中心 by emailing KnowledgeCenter@FCVirginias.com.

特约作者:

Anthony Watson, Loan Officer

Farm Credit of the Virginias, Wytheville Branch Office

 

 

 

Carol Robinson, Loan Officer

Farm Credit of the Virginias, Abingdon Branch Office