The fund request section is a must if you are asking outside capital for funding your business.
If you are not writing your business plan to get funds from investors or lenders, then you can skip this section and directly move to the financial projection section of the business plan.
How much information you should provide under the fund request section depends on the purpose of writing the business plan.
For instance, if you are writing to get funds to the business such as loan or share capital from investors, you have to provide detailed information under this section.
Basically, under the fund request section, you mention when and how much funding you might need. You need to specify how much money do you need now and in the future?
How much fund do you need
You need to mention how much money you need to start and maintain the business.
Out of the total fund requirements, how much will be the owner’s contribution, how much you are asking as a loan and how much will be taken as share capital investment.
You need to be very specific on how much external funding you need to build your company and what are the sources you are expecting.
How funds will be used in business
Out of the total fund asked, you need to specify in what areas will these funds be used and what assets you must acquire.
For example, out of 1 Crore fund asked, if you want to use 30 lakhs for buying equipment, 20 lakhs for hiring personnel, 20 lakhs for paying debt and the balance 30 lakhs is for inventory, then you need to mention each amount under the head you will be utilising.
If you are asking for money as a loan, then include a loan repayment schedule under this section to let the lender know how it will be repaid.
For investors, you need to include return on investment. You can include ROI in case of lenders as well.
If you have certain terms and conditions, then put it under this section. Your investor, lender and you need to be agreed upon before putting this fund request forward.
What you should do before writing fund request section of a business plan
If you know how much fund you want, then you have an idea of what it is going to be used for.
This information can be easily included in the fund request section if you have prepared a start-up budget and a cost worksheet.
Your financial information under the fund section should be taken from your start-up budget and cost worksheet.
Your lenders or investors want to know your start-up cost. Therefore, prepare a budget to know how much you will be spending to bring your product.
Your start-up worksheet will tell the readers the reason why you need money. In other words, this particular sheet will let your investors or lenders know all the purchases you want to make in order to start the business.
You need to make sure that the amount you are asking is specific and it’s the same throughout all the parts of your business plan.
Your start up budget and worksheet will help you to write this section in detail.
You need to make sure that your financial statements support your funding request.