If banks entertained every “ this will turn into a $500M business” pitch, every aspiring entrepreneur would have secured a bank loan by now.
However, that’s not how lending authorities think. They ask for a business plan demonstrating the practical and financial feasibility of your business idea, and only when they find the idea sustainable do they sanction a loan.
So should you be building a business plan? Of course, you should.
The real question is should you be using AI to get a bank loan by helping you create the right kind of business plan?
Let’s explore that in this blog post. But before that…
Why is a business plan essential to get a bank loan?
The number one reason why people write a business plan is to secure funding—whether through a loan or an investment.
A business plan confirms that your business idea is grounded in reality. It acts as a bridge between your business idea and a lender’s confidence in funding it.
When approving your loan, banks aren’t looking for your enthusiasm. They are looking for a business idea that’s well-researched and has the potential to succeed. A well-crafted business plan offers an insight into that potential.
It outlines your goals, research, and business strategies, and offers a roadmap to run your business without any glitches. It answers lenders’ queries about your business and guides them to make an informed choice.
Most banks have made business plans compulsory to process loan applications. Even to apply for SBA loans, you will need a detailed business plan with financial projections.
That said, you will definitely need a business plan if you plan to get your loan applications approved.
Using AI to get a bank loan
Since the business plan stands between you and your desired funding, should you rely on AI to create one?
Well, I would be lying if I said AI can’t write a business plan. As a matter of fact, there’s nothing that an AI can’t do (at least half decently). Prompt it thoroughly and it will churn out an impressive first draft of your business plan. However, don’t make the mistake of considering that as your final business plan.
You see, AI hallucinates. 😵💫It can fabricate the details of market research, financials, and business strategies so seamlessly that they may look perfect on the outlook. However, dive a little deeper and you’ll identify gaps in the research.
Instead, I would suggest using AI to generate ideas, polish your content, assist you in market research, and build the structure. The idea is to go step-by-step even with your prompts to build a business plan. The even better way is to use business planning tools with AI functionality to speed up your process without making you feel lost.
While AI gives you a head start, you need to review your business plan and ensure consistency across sections to make it more realistic.
To cut short, AI can be used to write a business plan for your bank loan application. However, you can’t use that plan without going through review, revisions, and consistency checks.
Tips for using AI to write a business plan
It’s tempting to use AI to finish your business plan faster. Well, nothing wrong with it. However, these tips will help you prepare a more rewarding business plan with an AI for your business loan applications.
1. Revise and review
As simple as this advice may sound, it’s the most crucial tip: Revise and review your plan and its sections repeatedly until you find consistency throughout.
It’s easy to get swayed by the plan that an AI generates. However, it lacks the depth essential for securing funding.
So, cut down complex or overly ambitious words. Make the language simple and sniff through the fluff. Identify the made-up information and change it with more concrete and data-backed details.
2. Don’t over-rely
AI can’t understand your business from within without you feeding them the details.
That said, there’s no substitute for not knowing your business, its market, target audience, competition, and operations. AI can complement your knowledge and take you from point zero to point 10. However, you can’t expect it to generate relevant and extremely specific business plans just on its own.
The point is, don’t over-rely on AI to do all the work for you. Consider it as your assistant who can work on your guidance, not an expert who can churn out an insightful plan from scratch.
3. Use it to get a headstart
It’s difficult to get over blank page syndrome when starting your business plan. AI helps overcome that by providing a quick headstart and direction.
It can generate a quick first draft of key sections like the executive summary, market analysis, and financial projections, offering a clear starting point.
With AI’s assistance, you don’t have to worry about creating a structure from scratch. Instead, you can focus on refining the content, adding relevant details, and ensuring it aligns with your unique business vision.
4. Focus on personalization
AI can provide a generic structure, but lenders expect a business plan that reflects your unique vision and business idea.
Tailor the AI-generated content by adding personal insights, specific goals, and strategies that showcase your deep understanding of your business and its market. Highlight the unique value proposition that will make your plan stand out.
5. Validate financial data
AI tools can help create financial projections, but accuracy is critical when applying for a bank loan.
Cross-check AI-generated numbers with real-world data or consult with a financial expert. Lenders prioritize realistic and well-supported financials, so ensure that all assumptions in your plan are backed by credible research or industry benchmarks.
Get a head start with Upmetrics
You shouldn’t take months to finish your business plan, especially when the launch of your business depends on a bank loan. With AI, it’s much easier to prepare a business plan in the way that a loan officer would require.
However, instead of any Open AI, leverage an AI-powered business planning software to generate a more contextual and detailed plan. Such tools give you a structured template and guided workflow and integrate AI functionalities into different aspects of the plan writing process.
Get a quick headstart on your business plan with Upmetrics today!
