Funding requests are one aspect where the “under promise and over deliver” phenomenon might not work.
Set your business valuation too high, and investors might not invest. In contrast, value it too low, and you might end up receiving way less than what you’re truly worth.
Moreover, if I were to invest in your business, I would want to know why you are raising funds and how they will be used.
In short, a well-planned funding request with the purpose of fund-raise and a realistic ask is key to securing funds. You cannot mess up.
Need help writing the funding request for your business plan? Here’s our quick guide on writing a compelling and realistic funding request to ensure you don’t miss out.
Let’s dive right in.
What is the funding request?
The funding request section of a business plan is an official section for the organizations to ask for new funding. It outlines the amount of funding needed, the purpose of the funds, how they will be used, and in what timeline they will be used (generally for 5 years).
The main goal of a funding request is to secure the necessary capital to start or expand a business, fund a project, or achieve a specific objective.
How to write your business plan funding request
How you write your funding request heavily depends on why you’re raising funds—the purpose. So, before you start writing, be clear about your requirements and the purpose of fundraising.
Your purpose can be hiring new staff, getting the latest equipment, launching a new product, or starting or expanding a business.
Once you do that, you may start working on your funding request; follow these steps:
1. Provide business information
Start by providing a brief overview of your business. I know—you’ve already included all the information in the prior sections, but adding it here would be an opportunity for you to give your investors a little recap.
No, it does not get redundant—It doesn’t have to be. So don’t worry.
Moreover, sometimes, you only need to send the funding request, not the entire business plan. In such cases, such information makes sense and comes in handy.
So, here’s what you will have to explain in the funding request section of your business plan:
- Target Market
- Your business structure like LTD, LLC, or more
- Brief about your product/service
- Partners involved
- Business heir, if there exists.
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2. Present the current financial situation
You might have provided some financial information in the financial section. But, you have to add some figures here anyway. Not only will it be contextual but easier to have a clear picture in one place.
Here are some financial details that you will have to include in this section:
- Quarterly as well as yearly cash inflow and outflow
- Balance sheets
- P&L statement
- Expected financial condition in the upcoming quarter and year
- Include the list of assets and their ownership details if you are asking loan from the bank or applying for any grant
- Break-even point
- If your business is in debt, explain the situation in detail and brief plan for paying it
- Mention how much return on investment can they expect
- In the end, mention how will you pay off the loan or transfer the ownership of the business
3. Announce how much funds you need
When you explain the situation in brief and have all the facts and figures put aside, narrow it down to your requirements. Mention how much money you need.
For that, you will need to calculate your startup costs or the total costs of the activity for which you need funding.
Finally, justify your funding request by explaining how the investment will benefit your organization and contribute to its growth and success.
4. Discuss how you will use the money
Here, you have to narrow down what you need the money for and how you are going to use it. Just list down the details and put the figure for it—so much like how you do your billing. If you are taking the money for multiple things, highlight every detail.
Some examples of various areas where you might use the funding are:
- Product development
- Marketing and advertising
- Operational expenses
- Technological integration
5. Explain current and future financial planning
You must have explained a little about the inflow and outflow in the financial section of a business plan. But over here, you have to get into the details like:
- If you are getting a loan, outline your timelines for payments.
- If you are looking forward to selling, mention how it will affect the investors.
- And then, finally, mention the exit strategy. Your exit strategy includes how you will transfer the business ownership.
Key points to remember
As we now know what to include in the funding request, let’s see certain points that you need to keep in mind while writing it:
Target audience’s perspective. Applying for a loan is different from approaching an investor. Each of these situations involves different contract terms, types of funding, or amounts of money.
Clarity. Clearly explain with numbers how much funding is required, why you need it, and where you will use it. Also, keep your language for funding requests simple so that everyone can understand.
Realistic financial projections. Provide realistic financial projections so investors can feel confident about your business and trust you with an investment.
Call-to-action. Include a clear call-to-action that encourages investors to take the next steps, whether that’s scheduling a meeting or making an investment.
These may seem like simple tips, but they can help you write a strong funding request that gets investors interested in your business.
Conclusion
As a wrap-up, writing a compelling funding request requires a strategic approach and attention to detail. So, being carefully and include realistic projections.
If you are still confused about writing a funding request, you can leverage business planning software and make your business plan investment-ready.
