Who this article is for

This is aimed at owners preparing to approach a provider who have a genuine need but haven't yet written it down in a form someone outside the business can evaluate. If you have several competing priorities and a rough sense of the amount, this is the exercise that turns that into something specific.

It's less relevant if your need is a single, obvious, already-quoted purchase. In that case the quote largely is the plan, and you mainly need the short statement in the template below. It is also not a business plan, a financial projection, or a substitute for either; it's one focused paragraph plus the documentation that backs it. And writing a strong one does not make funding more likely to be approved. It makes your request clearer to evaluate, which is a different and more honest claim.

Why "a little of everything" is a weaker story than one clear priority

When an owner is asked what they'd do with funding, it's tempting to list everything on the wish list at once: a new truck, some marketing, a little cushion for payroll, maybe a small renovation. Each of those might be a real and reasonable need, but presented as an unranked list, they can read as unfocused, and they make it harder for a reviewer (or for you) to judge whether the amount requested actually matches a specific, well-thought-out plan. A clear, prioritized use-of-funds narrative does the opposite: it tells a specific story about a specific need, with a specific expected outcome, which is generally easier for a reviewer to evaluate and easier for you to actually execute once funding is in hand.

Why providers want a focused narrative

A scattered list of intended uses can raise a few questions in a reviewer's mind, even if unintentionally: Does the business actually have a clear plan, or is it seeking funding somewhat reactively? Is the requested amount tied to real, specific costs, or is it a round number chosen without much analysis? Will the funds address the most pressing need first, or will they be spread thin across several lower-priority items? None of these questions have to reflect poorly on your business, but a clear, prioritized narrative answers them proactively, rather than leaving a reviewer to guess.

How to prioritize between competing needs

Most businesses genuinely do have more than one reasonable use for additional capital. The goal of a use-of-funds plan isn't to pretend you only have one need. It's to rank them and be clear about the primary purpose. A few useful questions for prioritizing:

  1. Which need is time-sensitive? A piece of equipment that's actively failing and limiting how much work you can take on is generally more urgent than a marketing campaign that could reasonably wait another quarter.
  2. Which need has the clearest, most measurable return? Replacing a truck that's currently costing significant money in repairs and downtime often has a more concrete, calculable payoff than a general "growth" line item.
  3. Which need is closest to "shovel-ready"? If you already have a quote for a specific piece of equipment, that's a more concrete, executable use of funds than a vaguer plan to "expand the team" without specific hires identified.
  4. What's the minimum amount that meaningfully addresses the top priority? It's worth resisting the urge to round up "just in case." A specific, well-justified amount tied to a specific need is generally a stronger narrative than a larger, less precisely justified request.

Once you've ranked your needs this way, the primary use of funds becomes the centerpiece of your narrative, with secondary uses mentioned only if they're a genuinely meaningful part of the overall plan, not as an unranked add-on list.

A simple template for a one-paragraph use-of-funds statement

A clear use-of-funds statement doesn't need to be long. A useful structure is:

"[Business name] is requesting [amount] to [primary use, stated specifically]. This will [expected concrete outcome, more capacity, reduced downtime, ability to take on X additional jobs per month, etc.]. [If applicable: a secondary, smaller use of funds]. We expect this to [timeframe and expected effect on revenue or operations]."

For example: "Riverside Roofing is requesting $45,000 to purchase a replacement box truck, following the breakdown of our current 2014 model, which has required over $8,000 in repairs in the past six months and has caused two missed job commitments this quarter. This will restore our full crew capacity and allow us to take on the backlog of estimated jobs currently on hold. We expect this to be reflected in restored monthly revenue within 60 days of the purchase."

Notice what this example does: it names a specific amount, a specific and singular primary purpose, a concrete reason the need exists, and a reasonably specific expected outcome, without promising a guaranteed result or a specific approval outcome, since neither is something the business itself can promise.

A quick checklist before you finalize your statement

  • Does the statement lead with a single, clearly stated primary use, not a list?
  • Is the requested amount tied to a specific, ideally documented cost (a quote, an invoice, a clearly estimated budget)?
  • Does it explain why the need exists now, briefly and factually?
  • Does it describe an expected outcome without guaranteeing a specific financial result?
  • If there's a secondary use of funds, is it clearly identified as secondary, not blended in as equally important?
  • Have you avoided vague language like "general business purposes" in favor of something specific?

A weaker example, and why

For contrast, here is the same business writing a much weaker statement:

"Riverside Roofing is seeking $75,000 for general business purposes including equipment, marketing, hiring, and working capital to help us grow and take our business to the next level."

Every problem in that sentence is fixable: the amount is a round number with nothing tying it to a documented cost; four unranked uses make it impossible to tell what actually happens with the money; "general business purposes" is precisely the phrase a reviewer cannot evaluate; and "take our business to the next level" states no outcome that anyone could later check. Rewriting it as the earlier example did (one priority, a documented cost, a concrete reason, a checkable outcome) changes nothing about the business and everything about how legible the request is.

Common mistakes to avoid

  • Rounding up "just in case." An amount tied to a quote is easier to justify than a round number chosen for comfort.
  • Leading with the amount instead of the need. The need explains the amount; the reverse doesn't work.
  • Promising a financial result. You can state an expected operational outcome. You cannot promise revenue, and you should not try to.
  • Hiding a weak spot. If the truck broke down because maintenance slipped, a brief factual acknowledgment reads better than an omission a reviewer notices on their own.
  • Blending secondary uses into the primary one. If 80% is the truck and 20% is a cushion, say exactly that.

Questions to ask yourself before you send it

  • Could someone outside my business read this once and correctly state what the money is for?
  • Is every number in it traceable to a document I could produce if asked?
  • Does the timeframe I've given reflect what I actually believe, or what I think sounds good?
  • If the amount were 20% smaller, would the primary need still be addressed? If yes, why am I asking for the larger figure?
  • Have I described an outcome that could later be checked, rather than an aspiration?

The bigger benefit: clarity helps you too

A focused use-of-funds plan isn't only useful for a reviewer. It's a genuinely useful exercise for you as an owner. Writing it forces you to actually rank your priorities, attach real numbers to your plans, and think through the expected outcome before you commit to any financing. Many owners find that going through this exercise changes their own thinking about what they actually need most, independent of what any provider ultimately decides. Pairing a clear use-of-funds plan with organized documentation, covered in our checklist article on preparing a business funding document package, gives reviewers a complete, coherent picture of both what you need and why. This is general education, not individualized advice.