Free Credit Repair Service
Business Plan
Obtaining Business Financing
When obtaining a business loan
for a credit repair service business, it is imperative that you have a properly
structured business plan that will assist you in showcasing how you intend to
operate your Credit Repair Service business, how the business will operate, how
you intend to market the business, the anticipated financial results of your
company, and how you intend to repay your debt obligations. This sample loan
business plan will provide you with the framework that you need in order to
acquire a business loan for starting or expanding this type of business.
Executive Summary
Introduction
When obtaining a business loan for a credit repair service business,
it is imperative that your business plan has a clear and concise executive
summary that provides an outline of what are seeking to accomplish, how much
capital you are seeking to raise, the management biography of the business
owner, and an overview of the anticipated profit and loss statements of the
business. Here is an example of how the title paragraph should be written:
Credit Repair Service, Inc.
(“the Company”) is seeking a business loan of $100,000 in order to launch the
operations of a credit repair service business that will be based in
San Francisco,
California. The Company was founded in (Insert Year).
The business was founded by Mr. John Doe.
Products and Services
In the next segment of the
business loan and business planning document, you should showcase the products
and services that you will be providing to the general public. For instance:
Business Loan Terms
Now it is time to discuss the
anticipated terms of the business plan that you are seeking. An example
paragraph of how this is stated:
At this time, Mr. Doe is
seeking a conventional business loan in the amount of $100,000. The interest
rate, loan terms, and loan covenants are to be determined during negotiation.
However, this business plan assumes that the business will receive a seven year
business loan with a seven percent interest rate due on the outstanding
principal balance.
Management Biography
Now that the summary of the
business has been provided, it is time to provide a brief overview of the owner
of the business. An example paragraph summing up the owner is as follows:
Mr. Doe is a highly experienced
business person that has years of experience regarding the direct ownership and
management of business. He will be able to effectively bring the operations of
the Credit Repair Service to
profitability while ensuring that the business loan’s payments and its covenants
are met at all times.
Financial Statements
The most important thing to
your lender when applying for a business loan is how you intend to repay the
bank. In this section of the business plan, you should provide an overview of
the finance’s of the business discussing the anticipated revenues, expenses, and
profits/losses. You can also discuss the applicable collateral within the
business plan that will be used to secure your business financing.
Expansion Plans
One of the most important
aspects of your business plan is how you intend to expand the business over a
three to five year period. Banks and finance companies always want to see that
the business will experience a moderate to strong level of growth. This is
especially true in business lending because as your business grows the cash flow
that secures your business loan will decrease proportionality against your
monthly credit obligations. An example of how this is stated is as follows:
The Credit Repair Service will
continue to expand through organic means including increasing the Company’s
advertising budget via the reinvestment into the after tax cash flows of the
business. Additionally, if the business is highly successful then the Company
may seek to establish additional Credit Repair Service locations after the third
year of operations.
The Financing
Use of Business Loan Proceeds
In this section of the business
plan you should focus on how the proceeds of the business loan will be used. An
example of this would be as follows:
- Credit Repair
Office Establishment - $50,000
- FF&E -
$10,000
- Working
capital - $40,000
Management Equity
In this section of the business
plan you should discuss the percentage ownership of the business among the
owners of the business. For example:
Mr. Doe will own 100% of the
Credit Repair Service.
Board of Directors
When applying for business
financing, the bank will also want to know who serves as the board of directors.
For small businesses, usually the owner serves as the director of the business.
An example of how this is worded:
Mr. Doe will be the sole
director of Credit Repair Service, Inc.
Exit Strategy
Any bank or financing company
is also going to want to know what you intend to do with the business over a set
period of time. Many business owners will develop and expand a business with the
intent to sell the company to a third party at a later time. When drafting this
part of the business plan you should focus on what you intentions are in regards
to potentially selling the business. This is often worded as:
The Credit Repair Service will
continue to expand through organic means including increasing the Company’s
advertising budget via the reinvestment into the after tax cash flows of the
business. Additionally, if the business is highly successful then the Company
may seek to establish additional Credit Repair Service office locations after
the third year of operations.
Products and Services
When developing a business plan
that is appropriate for obtaining a business loan or other business credit
facility you need to clearly showcase the services or products that you will be
offering to the general public. An example of how this section is worded goes as
follows:
The primary source of revenue
for the business will come from the direct consultation to client’s that have
minor or substantial credit issues. The Company’s counselors will properly
advise and work with clients to effectively mitigate negative remarks on an
individual’s credit reports (among the three major credit bureaus: Experian,
TransUnion, and Equifax). The Company will also offer per hour advice to clients
regarding how to properly maintain their credit scores. Finally, the business
will develop an internal program that monitors clients’ credit profiles on a
monthly basis for an ongoing yearly fee. This tertiary stream of income is an
important secondary revenue center as it will provide a recurring income stream
for the business, which will substantially increase the Company’s valuation.
In regards to fees, the client
will pay directly for these counseling services, which will be offered at a
fixed rate and predetermined before the Company develops a plan to improve a
client’s credit. The Company will maintain extensive policies on fee disclosures
to ensure that client’s clearly understand the costs associated with the
Company’s services as well as all other applicable disclaimers and warranties.
Industry and Market Analysis
The
Current
State of the Economy
It is important to let your
financial institution know that you are well apprised of the financial situation
of the general economy when you are applying for a business loan. This is
especially true in today’s environment where lending has become more difficult
and will remain more difficult in the foreseeable future. Specifically, you
should gear this section of the business plan analysis towards the industry that
you are operating within. For example:
The current economy has
remained difficult over the past few years.
However, credit counseling and credit repair businesses typically operate with a
great degree of economic immunity as people will continue to require these
services on an ongoing basis, especially during deleterious economic climates.
As such, Management feels that the current economic climate is actually an
excellent time to launch this type of business as millions of people are
currently having substantial issues with their credit profiles and debts.
The Credit Repair Service
Industry
In addition to providing your
business loan officer with an understanding of the general economy, it is
important that you showcase that you have an equal understanding of the industry
in which you are operating within. As such, you will need to provide you
business loan institution of a brief overview of your industry and any potential
changes that may affect the way that your company does business. An example of
how an industry overview is as follows:
The credit counseling and
credit management industry represents over 5,000 established businesses that
employ more than 15,000. Each year, these businesses aggregately generate more
than $2 billion dollars a year of revenue and provide gross annual payrolls of
$600 million dollars. The growth rate for this industry has been tremendous over
the last five years as the growth of financial transaction over the Internet has
increased significantly. Over the last five years, the number of agents
operating within this market more than doubled, with income received by these
firms increasing more than 300%.
As lending has become much more
scientific over the last fifteen years with the implementation of electronic
credit reporting, FICO scores, and electronic employment records, the need for
consumers to maintain strong credit profiles is tremendous. This is especially
true in today’s economy where millions of people have over extended themselves
with debt, and require professional assistance with loan renegotiations, credit
repair services, and credit advisory services.
Target Market
In this section of the business
loan application and business plan analysis, you should focus on the
demographics of your localized market (or national market if applicable). This
section should discuss how many people live in your area, the anticipated number
of people that would require the use of Credit Repair Services, the median
household income of people living in the area, poverty line statistics, and any
applicable laws that would apply to your operation of Credit Repair Services.
Competition
Many people that are developing
new businesses or expanding existing businesses often feel that their business
does not have any competition or limited competition at best. However, this is
almost never the case. Unless you have re-invented the wheel – you will have
competition. When applying for a business loan, you should clearly showcase your
competition in your business plan. This is especially important to your banker
as they will be able to gauge your ability to be successful in your targeted
market. Many business loan underwriters will aggressively confirm that
competitive nature of your local market and your local industry.
When drafting this section of
the plan you should heavily discuss the competitive advantages that you intend
to have over your competition.
Marketing Plan
In addition to all of the above
information that we have covered, your business loan officer is also going to
want to know how you intend to market your business to the general public. Most
people do not quite understand how to effectively market their business outside
of prominent signage or flyer distribution. When applying for a business loan
(again in this difficult lending climate), your banker is going to want to see
that you have a clear methodology of how you intend to market your services or
products to the general public. In this section of the business plan – we will
overview how to showcase your services/products to the general public.
Marketing Overview Example
- Develop an
online presence by developing a website and placing the Company’s name and
contact information with online directories.
- Establish
relationships with accountants within the targeted market
Marketing Strategies Overview
Additionally, you will be
required to further drill down (in your business plan) how you intend to
implement your strategies when you launch or expand your business’s operations.
In this section of the business loan and business plan documents, you should
amplify the bullet points from the section above. For instance:
Mr. Doe intends on using a
number of marketing strategies that will allow Credit Repair Service, Inc. to
easily target men and women within the target market. These strategies include
traditional print advertisements and ads placed on search engines on the
Internet. Below is a description of how the business intends to market its
services to the general public.
Credit Repair Service, Inc. will also use an internet based strategy. This is
very important as many people seeking local and regional service providers, such
as credit advisory/repair companies, now the Internet to conduct their
preliminary searches. Mr. Doe will register Credit Repair Service with online
portals so that potential customers can easily reach the business. The Company
will also develop its own website showcasing the services offered by the
business, the Credit Repair Service’s team of credit counselors, and relevant
contact information.
The Company will maintain a
sizable amount of print and traditional advertising methods within local markets
to promote the credit repair services that the Company is offering. Mr. Doe will
also develop ongoing referral relationships with accountants within the
Company’s local market who will refer clients with significant credit
repair/advisory issues. In time, this will become an invaluable source of new
business for Credit Repair Service, Inc.
The Financial Plan
Beyond any other part of your
business loan application or business plan, the financials section of these
documents are what matters most when applying for a business loan or any other
type of credit facility. Ultimately, this section of the business plan showcases
not only what your anticipated profitability will be, but also how you intend to
repay the funds that you have borrowed through your business financing facility.
An example of how this section is structure is as follows:
Assumptions
- Credit Repair
Service, Inc. will have an average annual growth rate of 10% per year.
- Mr. Doe will
acquire $100,000 through a business loan in order to launch the operations of
the business.
Proforma Financials for a
Business Loan
Now it is time to showcase how
you intend to repay your loan, generate a profit, and increase the book value of
your business over a three to five year period. BusinessPlansForLoan.com has
developed an easy to use financial model that you can use when drafting out the
financial model for your business plan and business loan application. Through
your business loan application, you will be required to have the following:
- Profit and
Loss Statement for your Credit Repair Service
- Cash Flow
Analysis for the Credit Repair Service
- Balance Sheet
for the Credit Repair Service
- Business Loan
Amortization Tables
Please see images below