How to Create a Funding Request
Are you thinking about starting your own business? If so, you’ll need the funds to turn your vision of a profitable venture into a reality. While some entrepreneurs have personal cash and assets to fund their businesses, most require assistance from outside sources, in which case a “funding request” is used.
What is a Funding Request?
A funding request is exactly what it sounds like: a written request to obtain funding from an lender or investor for your business. It’s typically included as part of the overall business plan, specifically focusing on the business’s funding needs. Whether you’re seeking capital from a traditional bank, private investor, or angel investor, you should create a funding request. It’s a critical element that increases your chance of getting approved for funding.
What to Include in a Funding Request
So, what should you include your funding request? According to the Small Business Administration (SBA), a typical funding request should include a few key points of information, starting with your business’s current funding requirement. In other words, how much money do you currently need to operate your business? To calculate your business’s current funding requirements, consider all associated operating costs and revenue.
With that said, you should also include your business’s projected funding requirements over the next five years. As your business grows — and hopefully it does — you’ll probably need additional funding to sustain its growth. By including this information in your funding request, you can secure this capital early so you don’t have to worry about it later down the road.
Other things to include in your business’s funding request is your plan for using the obtained funding (e.g. payroll, merchandise stock, marketing, capital expenditures, working capital, debt retirement, acquisitions, etc.), as well as any strategic situation plans for the near future. This may include company buyouts, acquisitions, debt repayment, or selling your business. As explained by the SBA, this information is highly important to lenders and investors, as it will affect your ability to repay the loan.
Last but note least, be sure to include a time period for your funding request, informing the lender or investor when exactly you need the money and how/when it will be used.