In the USDA programmes that ask for a business plan, it is a defined deliverable with pro forma financial statements attached to it — and under a Value-Added Producer Grant planning award, the grant itself is what pays for the plan. We prepare the plan to the programme’s own requirements, alongside the feasibility study when the file needs both.
Under the Value-Added Producer Grant regulation, a Business Plan is defined term, not a genre: “a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals, including Pro Forma Financial Statements appropriate to the term and scope of the Project and sufficient to evidence the viability of the Project.” The same regulation defines the pro forma statement as part of the Business Plan, requiring an explanation of all assumptions — input prices, finished product prices and other economic factors — and a minimum of three years of cash flow statements, income statements and balance sheets.
That definition is the specification we write to under this programme. It is also where a general-purpose business plan tends to fall short of it: the narrative is present, the assumption schedule behind the numbers is not, and a reviewer cannot test whether the projections are evidence or optimism.
| Programme | What the regulation asks for | Citation |
|---|---|---|
| VAPG — Working Capital grants | Applicants must provide a copy of the Business Plan completed for the value-added project, and a copy of a Feasibility Study prepared by a Qualified Consultant, subject to the exceptions in the regulation. | 7 CFR 4284, subpart J |
| VAPG — Planning grants | Grant funds may be used to pay a Qualified Consultant to conduct and develop a Feasibility Study, Business Plan and/or Marketing Plan for the project. The grant pays for the plan. | 7 CFR 4284.925 |
| Rural Business Development Grants | Business-opportunity funds may be used for feasibility and business plan studies, and technical assistance to small and emerging businesses expressly includes feasibility studies and business plans. | 7 CFR 4280, subpart E |
| Business & Industry guaranteed loans (OneRD) | The borrower’s business plan is one of the items the Agency weighs in deciding technical feasibility, market feasibility and economic viability — and where the lender’s analysis, the business plan or the project information is not sufficient, the Agency may require a feasibility study. | 7 CFR 5001.306 |
Two consequences follow from the B&I rule that applicants routinely miss. A guaranteed loan of $600,000 or less may be processed under the reduced-documentation paragraph provided the Agency determines the lender’s analysis, the borrower’s business plan or other submitted information is sufficient to establish feasibility and viability — so on small files the business plan is doing the work a study would otherwise do. And for a guaranteed loan greater than $1,000,000 to a new business, an independent feasibility study is required outright; there the plan supports the study rather than replacing it.
They answer different questions for different readers. The business plan is management’s document: this is what we intend to build, how we will operate it, who will run it and what the numbers look like if we are right. The feasibility study is the independent document: here is whether the market, the cost structure and the debt service support that intention, prepared by a consultant with no stake in the outcome.
A USDA file often needs both, and they must agree. When the plan projects volumes the study does not support, the reviewer sees the discrepancy before you do. We prepare them as one exercise with one set of assumptions, whether or not both documents carry our name. If you are still deciding, our feasibility study vs business plan comparison sets out the distinction in detail.
The entity, its ownership and governance, the project’s physical scope, the commodity or service, and the value-added step where the programme requires one. Written so a reviewer who has never seen the project can describe it back accurately.
Who buys, at what price, on what terms, and what the competitive alternatives are. Demand evidence is sourced and dated, not asserted — a projection without a source is the first thing an underwriter strikes.
Throughput, staffing, procurement, seasonality, capacity constraints and the ramp schedule. This is where the pro forma’s revenue line stops being a number and becomes a description of how the number happens.
Who runs it, what they have run before, and where the gaps are. Named gaps with a mitigation plan read better than an org chart with no history behind it.
At minimum three years of income statements, cash flow statements and balance sheets, with every assumption — input prices, finished product prices, wage rates, utilisation, working capital cycle — carried in a schedule the reviewer can audit line by line.
Total project cost reconciled to the funding stack, with the programme’s cost-share or matching-funds requirement shown as it will be met and evidenced. Grant budgets are tied back to the work plan so the two cannot drift apart.
The financial model is built first and the narrative is written to it, not the other way round. Revenue is driven by units and price, each traceable to a source: contracted offtake where it exists, comparable market pricing where it does not, capacity and utilisation on the volume side. Cost of goods is built from the bill of materials and the input contracts. Operating expense is built line by line from staffing, utilities, insurance, maintenance and the professional fees the project will actually carry.
Debt service is modelled on the instrument being applied for, at the term and structure the lender is offering, not a generic amortisation. Where the project depends on grant proceeds, the model shows what happens to coverage if the award is smaller than requested or arrives later than planned — a scenario a reviewer will test whether or not you present it.
Sensitivities are run on the two or three variables that actually move the outcome. For most value-added projects that is the input-price spread, the realised premium over commodity pricing, and the ramp to design throughput. A model that shows the project surviving a reasonable downside is more persuasive than one that only shows the base case.
Fees are fixed and quoted in one business day after a short qualification call — there is no hourly billing and no scope creep on our side of the engagement. Standard delivery is 10–15 business days from the point the project information is complete. RUSH delivery in 7 business days is available at additional cost.
The sequence is straightforward: a qualification Zoom with the analyst who would run the work; a written information request scoped to the programme you are applying under; model build; a review draft you and your lender can mark up; and the final deliverable. Where a feasibility study is required in the same file, the two are scheduled together so the plan and the study never carry different numbers.
Where a Planning Grant is paying for the work, we can be engaged as the Qualified Consultant and scope the deliverable to what the grant funds — feasibility study, business plan, marketing plan, or the combination the notice allows.
The recurring failures are structural rather than stylistic, and all of them are avoidable:
Under a VAPG Planning Grant, funds may only be used to pay a Qualified Consultant to conduct and develop a Feasibility Study, Business Plan and/or Marketing Plan for the value-added project — so yes, that is the express purpose of the grant. Rural Business Development Grant funds may likewise be used for feasibility and business plan studies as a business-opportunity activity. Confirm the eligible-use language in the notice you are applying under.
It depends on the programme and the size of the request. VAPG working capital applications call for both — a copy of the Business Plan completed for the project and a Feasibility Study prepared by a Qualified Consultant — except where the applicant qualifies to file the simplified application described at 7 CFR 4284.932, which waives the requirement to submit either document without changing how the proposal is scored. On a B&I guaranteed loan, the business plan is part of what the Agency uses to judge feasibility and viability, and a feasibility study is required for a loan greater than $1,000,000 to a new business. Below that threshold the Agency may still require a study if the plan and the lender’s analysis are not sufficient.
The VAPG regulation sets the floor at three years of cash flow statements, income statements and balance sheets, with all assumptions explained. On guaranteed-loan files we normally build the model out to match the loan term instead, so debt service coverage can be read across the whole amortisation.
Yes, and we will reconcile the two before delivery. If the study’s assumptions cannot be supported we will say so rather than quietly carry them into the plan; a file where the two documents disagree is worse than a file with one weak document.
Our fiduciary duty on feasibility work runs to the lender and the agency, never the borrower, and that is what makes the study usable. A business plan is by nature management’s document, so we prepare it with the applicant — but we will not write a projection into a plan that our own analysis does not support.
The programme and notice you are applying under, the project scope and cost estimate, any offtake or supply agreements, historical financial statements if the entity is operating, and the ownership and governance structure. The written request we send after the qualification call is scoped to the specific programme, so you are not assembling documents nobody will read.
Fixed fee quoted in one business day. Standard delivery 10–15 business days; RUSH in 7 business days at additional cost.
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Wert-Berater, Inc. is an independent provider of feasibility studies and other related services. The firm does not provide financing or equity investment advice, and does not arrange, broker, or place debt or equity capital of any kind.
All appraisal assignments are performed by Bruce E. Jones, MAI, ASA-GC, BCA, CMEA, a member of the Appraisal Institute since 2006, a staff member of Wert-Berater, Inc. and owner of Special Purpose Realty Valuation.