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How to Write an SBA Business Plan

If you’re thinking about starting a small business, or if you’ve been a business owner for a while but have never applied for capital, you may be wondering where and how to go about it. The good news is that documenting a business plan for SBA loans doesn’t have to be a difficult task. In fact, it can be fun!

A good business plan walks you through each stage of establishing and managing your small business. You’ll use your SBA business plan as a guide to organize, run, and grow your new company. It’s a way to structure through the key elements of your company.

SBA business plans help you get the required capital or acquire new clients or business partners. Investors want to feel convinced and optimistic they’ll see a return on their investment. Your SBA business plan is the weapon you’ll use to persuade people that working alongside your business or investing in your business is a smart choice. That being said, here’s everything you need to know about SBA loans and business plans and how you can increase your chances for success.

What is an SBA Loan?

If you’re a small business owner, you’re in luck. As the name implies, SBA loans are loan programs issued by banks and credit unions backed by the U.S. Small Business Administration (SBA) or a member of its network of supported participating lenders. This means that if you cannot pay back your loan, the government helps repay the traditional lender (bank) that provided the loan.

The SBA requires guarantees from your business partners who own at least 20% of the business, implying if you get an SBA loan, you are putting your assets at stake in case you’re unable to repay the loan. Additionally, companies that have at least 2 years of strong business and financials are mostly eligible for SBA loans. However, if your small business is struggling to make ends meet, an SBA loan may not be the right fit for you.

Irrespective of the personal guarantee requirement, SBA loans are one of the most popular ways to get capital to grow and manage your small business. Not only can you leverage their flexible repayment terms, but you can also take advantage of their low-interest rates to grow your small business. If you want to learn more about it, here’s our guide on SBA business loans . 

But before we move any further, let’s take a look at what the SBA is. 

The Small Business Administration (SBA) is a government agency in the U.S. that offers help and counseling to small businesses and startups by providing tools such as business planners, small business loans, and other training programs.

It also offers professional business documentation to guide small companies and startups through the procedures for applying for a small business loan. To do so, you must have a strong sense of what your business goals are and what your company does, along with a solid plan.  

If your business plan isn’t convincing and effective, you might have difficulty getting an SBA business loan. This is why it is important to have a clear vision of the business goal you want to achieve while working on the documentation.

In this article, we’ll take a look at what an SBA business plan includes.

Why You Need a Business Plan for SBA Business Loans

SBA business loans require a significant amount of documentation highlighting your business goals and your personal finances. You’ll need to mention your previous tax returns, bank statements, and different application forms based on the type of SBA business loan you require.

Alongside your past financial statements, the traditional lender issuing the SBA business loan would want to know about the future of your business. They’ll ask you about your plan on how you’d utilize the loan on your business and that your future cash flow estimates indicate that your company can afford loan repayments. 

This is where SBA business plans come into the picture. Besides providing other documentation required for the loan, you’ll need to draft a business plan to go with the rest of the loan application. Not only will your SBA business plan describe your business to your lender, but it will also have financial statements that the bank will require to help identify if you qualify for a loan.

Now, let’s take a look at what the SBA business plan template includes.

Writing an SBA Business Plan: A Comprehensive Guide

Learning how to write a brilliant SBA business plan is a crucial step toward creating a fruitful business. Put simply, a business plan explains exactly what your product or service is and why consumers would want to purchase it, alongside how you will handle any market challenges and environmental risks. It can help you determine what you want to achieve and how you plan to achieve your business goals. This, in turn, can help you to market your business, motivate your teams, and thereby make well-informed decisions.

A strong SBA business plan can also serve as a communication tool for future investors and potential loan providers. It will help you portray your present financial status, active revenue sources, and how you plan to meet revenue estimates. Even though a business plan isn’t relevant for all types of credit, it plays a crucial role in SBA business loans. While no two business plans are similar, every plan should have the following elements:

1. Executive Summary

Your business plan’s executive summary is your only opportunity to introduce your business to potential investors and lenders, which is why it needs to be concise and powerful. This summary should provide a brief gist of the history and background of your business that should be engaging enough for your readers. Oftentimes, it is helpful to write this part at the end – after you’ve spent considerable time examining and articulating all the details of your business.

2. Company Summary

Explain what your product or service does and why consumers or businesses will want to purchase it. Make sure to highlight all the areas where your product or service has leverage over the competition.

On the other hand, add the pending or established copyrights or trademarks, as well as the present or future plans for further research and development (R&D).

3. Market Analysis

Mentioning the strategy would highlight the marketability of your business, your competition, and your position into the competitive landscape. 

In the marketing analysis, provide all the information about your target industry, including the market size, target market, the market requirements, and hurdles to entry, like legal conditions and supply issues. Additionally, any information on the market tests you have undertaken should be included in your business plan. You must also include your direct and indirect competition in the market analysis section.

4. Marketing Plan

In your marketing plan, consider highlighting how to promote your business and generate leads for revenue. Describe the functionalities or characteristics of your product or service and how it helps consumers. 

Mention how your product or service differs from your competitors in the market and how you will grow your business and generate revenue. Additionally, provide details about your product’s life cycle and intellectual property issues.

5. Management Team

To highlight your human capital, describe your business in terms of structure and leadership. Let your readers know the roles of your employees and their qualifications. Elaborate on this in your documentation, and try providing their resumes as well. 

6. Financial Summary

Funding and financial analysis are two of the most crucial areas in your business. Highlight the funding your small business would require and provide supporting financial data on your previous and future financial activity.

Add necessary documents that portray your company’s present financial status, including cash flow statements, income statements, revenue sheets, and balance sheets. Mention your expectations for revenues along with the expense of your products, rent, fuel, electricity, utilities, salaries, and other aspects. 

7. Appendix

There are different ways you can organize and present the information given above so you can share it with potential lenders and investors, current and future team members, management teams, and anyone who needs to go through the vision of your company.

Conduct your research and find a business plan format that suits your business goals. There are multiple SBA business plan types for different readers, including investors and employees, so you can change your plan based on your target audience. 

Here are a few things you must keep in your mind:

• Create a business plan in a way such that it’s easier to find key information. Create a cover page and table of contents (ToC) that makes basic information easier to find. Moreover, it’s recommended to use dividers with tabs if you’re making hard copies of the documentation and putting them in a binder. 
• Make it as detailed as possible. Based on your product or service, you may also want to add a section on Action Plans, which includes data on compliance and safety processes, legal landscapes, regulations, operational & management plans, an employee manual, job descriptions of your staff, and everything you’d want to put on the hard copies (or in the digital document).
• Use an Appendix for highlighting additional information. The Appendix is where you attach supporting documents, including financial and market analyses, staff resumes, logo & branding examples, and so on.

Why more businesses are working with BSBCON

Nowadays, more and more business owners and entrepreneurs are trying their luck in the ever-competitive market. 

Business is a vast landscape. There are a number of ways you can leverage to build and promote a marketing idea. However, the first thing you need to promote a product or service is a solid plan, and to propose this plan, your company needs business plan writers.

Think of BSBCON as a crucial and cost-effective extension of your own business. BSBCON is a leading company that offers SMB consulting solutions, including providing thorough business plans, pitch decks, strategic planning, and more, that save you both time and resources.

If you want to increase your chances of securing capital, grants, or investors, partner with BSBCON and get a solid business blueprint with a professional business plan. 

BSBCON’s SBA business plan writers offer all such insights, including marketing plans & strategies, pitch decks & storyboards, market research & in-depth analysis, business planning, bookkeeping & accounting, financial modeling – and the list goes on! Get in touch with BSBCON’s SMB consultants today to see how they can help you. With BSBCON, you get guidance to build a strategically designed, SBA-approved business plan that offers everything potential investors need to evaluate your business and business goals.

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How to Write an SBA Business Plan

TABLE OF CONTENTS

Applying for a loan through the Small Business Administration (SBA)? Here’s how to write an SBA business plan for your application. 

We’ll walk you through the process and explain:

• Why you need an SBA business plan
• How to write a business plan when applying for an SBA loan
• The elements of an SBA business plan template
• How to prepare your plan for a successful SBA loan application

Why You Need a Small Business Administration Business Plan

The SBA works with a network of approved lenders to support a variety of loan programs designed to help small businesses succeed. To make these loans affordable, the SBA guarantees the loans, reducing risk to lenders and enabling them to charge lower rates. Approved lenders must not exceed rate caps set by the SBA. This makes these loans one of the most affordable forms of financing for small businesses .

When deciding which loan applications to approve, one of the most important factors lenders consider is your company’s ability to repay your loan. Because of this, one of the best ways to improve your odds of getting a loan is to present lenders with a well-written business plan.

How to Write a Business Plan for an SBA Loan

A typical sample business plan for an SBA loan typically includes 9 key components, according to the SBA :

• Executive summary
• Company description
• Market analysis
• Organization and management
• Service or product line
• Marketing and sales
• Funding request
• Financial projections

Use this SBA loan business plan sample outline to organize the structure of your plan. Then use the detailed explanation of each section below to flesh in your outline.

To fill in the details of your outline, you may find it convenient to first assemble some preliminary information you’ll need, including:

• A brief statement summarizing your company mission
• Business incorporation papers
• Market research summaries and resources
• Your company organizational chart
• Resumes of key staff members
• Marketing and sales strategy planning
• Financial statements projecting your business performance over the next few years, including a profit and loss statement (income statement), balance sheet and cash flow statement

Having this information available will make it easier to write your plan.

Filling in Your SBA Business Plan Template

Now we’ll explain what belongs in each section of your business plan. The items included below illustrate what typically goes in each section, but depending on the nature of your business, you may choose to omit certain items or include others. Adjust these guidelines to your individual needs.

1. Executive Summary

Your executive summary presents a short overview of the highlights of your business plan. It’s designed as a short overview of your plan for busy lenders who have to read many SBA loan applications are trying to decide whether it’s worthwhile to continue reading the rest of your plan. If a summary doesn’t grab their attention and convince them you’ve got a solid business plan, they may not read the rest of your plan.

With that in mind, it’s crucial to focus your summary on the main points of your plan and to keep it short. A couple of pages is a good target length.

Your executive summary should briefly cover:

• Your company’s mission statement
• A description of your company’s product or service
• Essential information about your leadership, employees and location
• Your company’s finances
• Your funding request

You may find it easier to outline your executive summary briefly and then write the rest of your business plan. You can then condense the detailed information from your plan into your executive summary to flesh it out.

2. Company Description

Your company description discusses:

• Your company’s mission
• What you do for your customers
• Who your target market is
• How you stand out from your competitors

You may find it easier to write this section after you’ve done your market research and developed a marketing and sales strategy.

3. Market Analysis

Your market analysis summarizes the results of your market research, covering items such as:

• The size and growth trends of your target market
• The composition and needs of your target demographic
• What your top competitors are doing
• How your company can gain a competitive advantage

Doing your homework when writing this section can help you persuade lenders that your business plan is viable. It can also help you make realistic revenue projections for developing your financial statements .

This section is a good place to include visual aids such as graphs and charts that illustrate the size of your market.

4. Organization and Management

This section covers information such as:

• The legal structure of your business ( sole proprietorship , partnership, LLC, S-corporation, or C-corporation)
• The organizational structure of your staff, which can include an organizational chart
• The backgrounds of your key personnel, which can include curriculum vitae or resumes
• Your operational plan, describing how you will run your business

5. Service or Product Line

This section addresses items such as:

• What products or services your company sells
• How your product or service benefits your customers
• Your product or service’s lifecycle (how your company will launch your product or service and grow market share)
• Intellectual property issues associated with your product (patents, copyrights)
• Research and development your company is doing related to your product or service

6. Marketing and Sales

Your marketing-and-sales section should convince lenders you have a viable plan to promote and sell your products or services. It covers topics such as:

• Your unique selling proposition (how you will position your brand to convince customers they should buy from you instead of a rival brand)
• What marketing channels you will use to promote your brand
• Your sales process

Writing this section can also help you estimate sales projections, which can be useful when creating your financial projections.

7. Funding Request

Your funding request formalizes what you’re asking for from prospective lenders, detailing key items such as:

• How much funding you need
• What type of funding you’re requesting (different business loan options , a line of credit or merchant cash advance)
• Your desired terms
• The amount of time your request covers
• What the funding will be used for
• How you intend to repay what you borrow

8. Financial Projections

This section gives lenders a picture of your company’s financial shape by summarizing items such as:

• Your company’s annual revenue, expenses and profits
• Your company’s balance of assets and liabilities
• Your company’s cash flow
• Your analysis of how long it will take your company to break even
• Relevant highlights of your personal finances, such as your net worth and credit score
• Collateral you could use to put up for a loan

Your company’s financials should be fleshed out in spreadsheets covering your key financial statements:

• Profit and loss (income) statement
• Balance sheet
• Cash flow statement

These statements and others you choose to use can be summarized in your business plan, with full details in attached spreadsheets.

9. Appendix

Your appendix includes any supporting documents that can help you make the case for your loan request, such as:

• Financial statements
• Credit histories
• Market research articles or links
• Marketing graphs and charts that go beyond the highlights included in your marketing section

Feel free to include any additional items that you think will impress lenders.

Preparing Your Plan for a Successful SBA Loan Application

Before using your business plan to apply for an SBA loan, you may find it helpful to have an expert review your plan and make suggestions on how to improve it. The SBA provides works in partnership with organizations such as SCORE to provide entrepreneurs with access to business mentors who can advise you on developing your business plan and applying for a loan. The SBA’s website includes an online tool to help you find local assistance from SCORE and other partner organizations in the agency’s network.

When you submit your plan with your loan application, lenders will typically check your personal credit score to evaluate your creditworthiness. You can improve the odds of your business plan succeeding by taking steps to improve your credit score before applying for a loan. A good place to start is by requesting a free copy of your credit report from AnnualCreditReport.com.

Using Your SBA Business Plan to Secure a Loan

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Guide to SBA's Economic Injury Disaster Loans

The Coronavirus Aid, Relief, and Economic Security (CARES) Act expanded the Small Business Administration’s long-standing Economic Injury Disaster Loan Program (EIDL).

September 01, 2021

Unlike the COVID-19 Paycheck Protection Program (PPP) loans, which were made through private and non-profit lenders and guaranteed through the federal government, the Small Business Administration’s Economic Injury Disaster Loans (EIDL) are made directly by the federal government.

In 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act expanded SBA’s long-standing EIDL program by recognizing a nationwide COVID EIDL. Usually, the loans under SBA’s EIDL program are tailored uniquely to a specific natural disaster after a Governor requests SBA’s assistance for affected counties.

Note: The COVID-19 EIDL program is not accepting new applications, increase requests, or reconsiderations. The SBA administers the EIDL program. Please contact the SBA with specific questions.

Your EIDL loan will come due soon, if it hasn't already. For immediate assistance on a question or application, please email: [email protected]

LATEST UPDATES TO THE COVID-19 EIDL LOANS & REPAYMENT

Deferment of COVID EIDL Repayment

SBA provided a deferment period of 30 months from the date on the original Note for COVID-19 EIDL borrowers.  That means some borrowers began repayment in the Fall of 2022 and more borrowers will begin repayment through the Fall of 2024.

More detailed information about eligibility and how deferment impacts your future loan payment amounts can be found here .

Hardship Accommodation Plan

SBA is offering a Hardship Accommodation Plan for borrowers experiencing short-term financial challenges. Borrowers eligible for this plan may make reduced payments for six months. Interest will continue to accrue, which may increase (or create) a balloon payment due at the end of the loan term.

• Borrowers are required to pay at least 10% of their monthly payment amount (with a $25 minimum), for six months.  
• During the Hardship Accommodation period, borrowers can voluntarily make larger payments.
• The regular monthly payment amount will resume and be required after the six-month Hardship Accommodation period ends. Borrowers may be able to renew the Hardship Accommodation Plan, if necessary.

Eligibility and Enrollment:

• Borrowers are eligible to enroll in the Hardship Accommodation Plan beginning 60 calendar days before their first payment due date. Click here for more detailed information on eligibility and enrollment.

Report EIDL Identity Theft

If you suspect that someone used your personal information without your knowledge or permission to obtain SBA’s COVID-19 Economic Injury Disaster Loan (EIDL) assistance, please download this  EIDL identity theft letter  for step-by-step instructions on how to report the identity theft case to SBA, including how to file an  SBA Declaration of Identity Theft .

Visit sba.gov for more information.

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Plan accounts are funded with a combination of traditional and designated Roth salary deferrals and annual profit-sharing contributions to the traditional 401(k). Vesting is immediate, and participants can direct how contributions are invested. Individual 401(k) plans do not need to be funded annually.

Individuals may contribute up to $22,500 for 2023 ($30,000 if age 50 or older) and $23,000 for 2024 ($30,500 if age 50 or older). Employers may contribute up to 25% of compensation, up to the annual maximum of $66,000 for 2023 and $69,000 for 2024. Total contributions cannot exceed $66,000 for 2023 ($73,500 if age 50 or older and contributing the catch-up contribution amount) and $69,000 for 2024 ($76,500 if age 50 or older and contributing the catch-up contribution amount). Salary deferral catch-up limits are $7,500 for 2023 and 2024 (if age 50 or older).

Contributions to an Individual 401(k) can be higher than contributions to other types of retirement plans.

You can fund your account as both the employer and the employee with the following: Annual profit-sharing contributions of up to 25% of your compensation or 20% of your net self-employment income.

SECURE 2.0 Act allows business owners to both establish an Individual 401(k) and make retroactive employer contributions until tax filing deadline plus extensions. Unincorporated business owners have until tax filing deadline, excluding extensions, to make retroactive elective deferrals. Generally, if your business is incorporated, you must make your deferral contributions in the same tax year.

You'll need to file IRS Form 5500 annually when your plan assets reach or exceed $250,000, or when you terminate your plan.

You must have a triggering event—generally either termination of employment or retirement—to take a distribution.

Traditional Individual 401(k)

• Generally, all withdrawals are subject to taxes.
• Withdrawals before age 59½ may be subject to a 10% penalty.
• Distributions are subject to a mandatory 20% federal tax withholding, except for Required Minimum Distributions (RMDs), hardship withdrawals, certain qualified exceptions, and direct rollovers.
• If you own 5% or more of the business, you must begin taking RMDs annually, starting with the year you reach age 73. If you don't make withdrawals, you may be subject to a penalty.

Under SECURE 2.0, if you don't take your RMD by the IRS deadline, a 25% excise tax on insufficient or late RMD withdrawals applies. If the RMD is corrected timely, the penalty can be reduced to 10%. Follow the IRS guidelines and consult your tax advisor.

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Qualified Distributions: Always tax-free.

• You can start making qualified distributions from a Roth 401(k) once you have satisfied two conditions: You are age 59½ or older, and you have met the five-year rule.

Non-Qualified Distributions: Earnings are generally subject to taxes.

• If you are under 59½ and/or have not met the 5-year rule, you may have to pay income tax, and if you are under 59½, you may incur a 10% penalty.
• Early withdrawals must include both contributions and earnings prorated based on the ratio of contributions to earnings in the account.
• Earnings are subject to a mandatory 20% federal tax withholding, except for hardship withdrawals, certain qualified exceptions, and direct rollovers.

SECURE 2.0 has eliminated RMDs for Roth 401(k) plans starting in 2024.

You may not take loans from your Individual 401(k) account.

Please refer to the IRS page on Individual 401(k) plans link for more information.

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