The funding request section of the business plan is where you bring together everything else you laid out in the previous sections.
Those other sections stated why your business will be successful and how successful it will be. But, the funding request section is where you communicate how much help you’ll need to be successful. Beyond that, it shows why your burgeoning small business is a good investment.
The funding request section relies heavily on the startup’s financial projections. Therefore, in this funding request example, I will refer to the same hypothetical business as I did in the example financial projections – a restaurant startup called Diner, LLC.
As a reminder, in the financial projections example, forecasted a capital budget, five years of operating budgets, and five years of financial budgets to lay the groundwork for this funding request. Therefore, I won’t include the actual financial projections in this example so as to not be redundant.
This example funding request, like the example financial projections, is built off of these two previous posts:
- “How Do You Calculate Funding Requirements?” 3 Easy Steps
- What Financial Information s/b Included in a Biz Plan + Why?
Funding request for startup restaurant
As outlined in the financial projections section, Diner LLC. is expected to achieve profitability quickly – within its first year of operation. Furthermore, it’s expected to continue to increase in financial health for the foreseeable future. Diner, LLC. respresents a prudent investment for small business lenders.
In order to realize it’s potential, outside funding is required.
Total pre-launch cash expenditures are estimated at $255,233.
Mr. Restaurantmanager, the sole-member of Diner, LLC. is committing $51,047 (20%) of the total launch costs.
This leaves $204,187 (80%) in funding needed to launch this venture.
Funding details for startup restaurant costs.
Funding is requested in the form of debt financing only.
Ideally, these funds would be lent through the SBA 7(a) Small Loan program at or near a rate of 6.00% APR. This is representative of the current terms of the prime rate (3.25%) + 2.75%.
The term of the debt financing is expected to be 10 years and to be repaid in 120 monthly installments of approximately $2,266.89.
No outside equity financing is being sought at this time. Mr. Restaurantmanager would remain the sole-member of Diner, LLC.
At the conclusion of the five-year financial projections, it is anticipated that the debt financing will be paid down to an approximate principal balance of $109,066.
At which point, it is undecided whether the business will be sold, expanded, or maintained as-is. With cash and other current assets anticipated to be valued at approximately $312,333, enough liquid capital will be available to pay the debt financing in its entirety – regardless of what course of action is chosen.