When a bank officer reads your business plan, one question matters more than any other: if we lend this money, how will it be repaid? Every page of the plan should help answer it. This article explains the five things banks check, what a bank-ready plan contains, how to make your projections believable, and the reasons applications are most often rejected.
The five things every bank checks
Banks often call these the “5 Cs of credit”.
| What they check | What it means | What to show |
|---|---|---|
| Character | Your track record and credit history | Years in business, management experience, a clean CCRIS and CTOS record |
| Capacity | Whether your cash flow can cover repayments | Financial statements and a cash flow projection with the loan repayments built in |
| Capital | How much of your own money is in the business | Paid-up capital, retained profits, your contribution to the project |
| Collateral | What protects the bank if things go wrong | Property, fixed deposits, or a guarantee such as one from Credit Guarantee Corporation (CGC) |
| Conditions | The purpose of the loan and your market | What the money is for, the industry outlook, contracts or orders in hand |
What a bank-ready business plan includes
- Executive summary: one page covering what you do, how much you need, what it is for and how you will repay it.
- Business overview: history, ownership, and your management team’s experience.
- Market and competitors: who your customers are, how large the market is, and why customers choose you.
- Operations: location, suppliers, staff and key processes.
- Sales and marketing plan: how you will win customers, and your pricing.
- Financial projections: three years of profit and loss, cash flow and balance sheet, with every assumption written down.
- Use of funds and repayment: how each ringgit will be spent, and a repayment schedule that fits your cash flow.
What makes projections believable
The projection is where most plans succeed or fail. Credit officers read a great many of them and recognise wishful thinking quickly.
- Start from real numbers. Base the forecast on your last two to three years of accounts or management accounts.
- Explain your assumptions. Sales growth, prices, margins and collection days should each have a stated reason.
- Be conservative. Show a base case and a downside case, not only the best case.
- Make the numbers agree. The cash balance in your cash flow should match your balance sheet.
- Show repayment headroom. The cash left each month after running costs should cover the loan instalments comfortably.
Why applications are rejected
- A sales forecast that jumps sharply with no evidence behind it.
- Personal and business money mixed in the same accounts.
- Late tax filings, or accounts that are missing or out of date.
- Late repayments showing on your credit report.
- No clear explanation of what the money is for.
- A template plan that does not match how the business actually works.
Before you submit
Requirements vary by bank and financing scheme, so ask for their checklist first. Most will ask for:
- your latest audited or management accounts
- recent business bank statements
- SSM registration documents and recent tax returns
- the business plan and projection model
Check your own CCRIS and CTOS reports before the bank does, so there are no surprises.
Where to start
- Pull your last two to three years of accounts and check they are complete and filed.
- Separate personal and business banking now, before the statements are requested.
- Draft the repayment schedule first, then build the projection around it to show headroom.
- Request the bank’s document checklist and clear your credit reports before you apply.
Get a plan that is ready for the bank
Our Business Plan & 3-Year Projection (RM2,000) covers your market, competitors, operations and marketing, with a three-year financial projection (P&L, cash flow and balance sheet) in Excel and two rounds of revisions. It is suitable for bank loans, government financing and investor funding. Start your business plan