How to Do a Proof of Concept for a Small Business Loan

To prove that a business is worthwhile and has a reasonable chance of succeeding, there needs to be the proof of concept. This is often a report that shows the bank how the business will go about making enough profit to pay back the loan. To complete a convincing report, extensive research must first be done.

Difficulty: Moderate

Instructions

1. Research the potential market for the product or service. Find out as much as possible about what market it will serve and how many people may be interested in buying.

2. Write a proof of concept report. Use concrete facts and figures so that the bank can see exactly what they need to see. The numbers, if the proof of concept was successful in proving viability of the business, will show the profit potential. If the numbers point to little profit or even a loss, tweak the business plan and research the effect of the new plan.

3. Create the product in prototype form if your business will be selling a product. The same must be done if the business is a design company. Something tangible to include in the report will help to illustrate the nature of the business and its potential viability.

4. Add any information about the company that will be helpful to the bank. They will want to know as much as possible in order to decide whether the business is capable of the proposed plan. The history of the company and any experience with a similar product or service should be included in the proof of concept.

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