How to write a business plan that lenders can follow

Why write a business plan at all?

Before you get into how to write a business plan, it helps to know what it's for. GOV.UK says a business plan can help you clarify your idea, spot potential problems, set out your goals and measure your progress. It also says you'll need one to secure investment or a bank loan. The British Business Bank adds that financial institutions and investors "will require a business plan before offering any funding".

So there are two readers. The first is you: the plan forces you to test assumptions on paper, where mistakes are cheap. The second is anyone you ask for money. Knowing how to write a business plan for both readers at once is the real skill. Be honest enough to help yourself, and clear enough to persuade someone else.

How to write a business plan: the sections to include

Start Up Loans lists nine sections in its guidance on how to write a business plan for a loan application. They make a sensible checklist for any small business.

Note the back-up plan, which is easy to skip when you learn how to write a business plan. Start Up Loans says it "cannot accept relying on your partner's income as a viable back-up plan", so think about savings, part-time work or cutting costs instead.

When you're working out how to write a business plan for your own business, give most space to the sections a reader will question most: customers, competition and money.

A simple business plan outline to copy

Part of how to write a business plan well is keeping each section short. Use this outline as a starting point. The word counts are our suggestion, not a rule.

If you'd rather not start from scratch on how to write a business plan, GOV.UK's write a business plan page links to free templates from The King's Trust and Start Up Loans. The Start Up Loans template is an Excel file and includes a cash flow forecast and a personal survival budget.

The numbers: forecasts explained

The financial section is where most people stall when they work out how to write a business plan. These terms come up most:

Startup costs

The one-off spending before you trade: equipment, stock, deposits, a website, registration fees. Our startup costs guide helps you list them.

Cash flow forecast

Month by month, the money you expect in and out. The British Business Bank says lenders use it to see whether money coming in covers money going out, which signals whether you can keep up repayments.

Personal survival budget

What you need to live on each month. It shows how much the business must pay you, and Start Up Loans asks for one.

Profit and loss forecast

Sales minus costs over a period, showing whether the business makes a profit on paper.

Projected balance sheet

What the business is expected to own and owe at a point in time.

Profit and cash are not the same. A business can be profitable and still run out of cash if customers pay late. That's why the cash flow forecast matters so much. Base each figure on something you can explain, such as a supplier quote or a price you've tested. Getting this right is the heart of how to write a business plan that a lender trusts.

How banks and lenders read your plan

When you think about how to write a business plan for funding, picture the person reading it. They're asking one question: will this business repay? Based on Start Up Loans and British Business Bank guidance, they look for:

• Viability: evidence that customers want this at a price that leaves a profit.
• Clear objectives: specific, measurable goals and how the money helps reach them.
• Relevant skills: experience, plus a plan for any gaps.
• Market research: real evidence, not just your opinion.
• A realistic back-up plan: how repayments get made if things go slowly.
• Insurance: cover in place, or an explanation of how you'd manage without it.
• Credit history: the British Business Bank says lenders almost always run a credit check, on you personally if you're a sole trader or partnership.

None of this changes how to write a business plan for yourself: the same evidence helps you decide. The British Business Bank also notes that lenders often weigh current financials more heavily than forecasts. If you're already trading, bring up-to-date figures. Clean records from a dedicated business account make that easy, so it's worth sorting early. You can compare business bank accounts if you haven't opened one yet.

For more on loan options, including Start Up Loans of £500 to £25,000 per person at a fixed 7.5% a year (British Business Bank figures, checked 25 October 2026), see our small business funding guide.

How to write a business plan in five sittings

Here's a practical way to tackle how to write a business plan without staring at a blank page.

1. 1

   Gather evidence

   Collect competitor prices, supplier quotes and any customer feedback or pre-orders.

2. 2

   Do the numbers first

   Build your startup costs, survival budget and cash flow forecast. They shape everything else.

3. 3

   Write the middle sections

   Business, customers, marketing and operations, in plain words with bullet points and tables.

4. 4

   Add risks and the summary

   Be honest about risks, then write a short summary of the whole plan.

5. 5

   Get a second reader

   Ask someone to read it cold. Anything they question, a lender will too. It's the simplest test of how to write a business plan clearly.

Start Up Loans gives similar tips: link every strategy to your objectives, support statements with evidence, keep it clear and concise, and proofread carefully.

Common mistakes to avoid

Avoid these slips and you've covered much of how to write a business plan that holds up. Tick each one off as a final check.

• Forecasts with no explanation of where the figures come from
• Assuming you'll win a big share of the market in year one
• Leaving out your own living costs
• No mention of competitors
• A back-up plan that relies on a partner's income
• Long paragraphs where a table would do

Keeping your plan up to date

Knowing how to write a business plan once is only half the job. The British Business Bank suggests a formal review at least once a year, and says many businesses check progress every three or six months. Review sooner if something big changes in your market. Compare your actual figures with the forecast, update targets and note what you've learned.

Your bank statements are the quickest way to see actual income and spending. Business accounts with categorised transactions or bookkeeping links, such as the tools covered in our Tide review, make that comparison quicker.

The short version

How to write a business plan comes down to three things: evidence that customers will pay, numbers you can explain, and honesty about risks. Keep it short, use the outline above, and update it as you trade. If you remember one thing about how to write a business plan, make it this: every claim needs a reason behind it.

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How to write a business plan: FAQs

Sources

• GOV.UK: write a business plan
• Start Up Loans: business plan template and its guide to writing a plan for a loan application
• British Business Bank: reviewing your business plan, getting your business ready for finance, and Start Up Loan guidance
• All sources checked 25 October 2026.