Business Plan Writing for SBA Loans - How To Write A Winning Business Plan

The Small Business Administration (SBA) offers loans to small businesses that need capital to grow or expand. This guide provides information on how to write a winning business plan.

Start with a clear understanding of what you need.

Before writing your business plan, make sure you understand exactly what you need. You should start by defining your goals and objectives. What do you hope to accomplish with the loan? Do you want to purchase equipment, hire employees, or build a new facility? Once you know what you want to achieve, you can begin to think about how you might go about achieving those goals.

Know the difference between a business plan and a marketing plan.

There are two main parts to any business plan: the financial section and the marketing section. The financial section includes things like your company history, projected revenue, and projected expenses. This part of the plan shows lenders how much money you need to run your business. The marketing section includes things like your product description, your marketing strategy, and your sales projections. This part of the business plan explains how you intend to market your products and services.

Understand the different types of loans available through the SBA.

The Small Business Administration (SBA) offers several types of loans to help small businesses start up and grow. These loans range from low interest rate loans to more expensive loans with higher rates. You should understand what type of loan you qualify for before applying. With rising interest rates, it is dependent on economic conditions. You’ll want to understand if the loan you are applying for requires collateral or not.

Learn about the different types of businesses eligible for SBA loans.

There are three main types of business loans offered by the SBA: 7(a), the most popular, 504, and Microloan. Each has its own set of requirements and eligibility criteria. The SBA 7(a) is most popular due to its no collateral characteristics, but usually carries higher interest rates and typically shorter payment terms. Because of its popularity, it also makes the loan the hardest to win.

Find out more about the SBA's requirements for loan applications.

If you're looking to apply for a small business loan through the Small Business Administration (SBA), there are several things you should consider before submitting your application. First, make sure you understand what type of loan you need. Next, find out whether you qualify for any other types of loans. To be eligible for 7(a) loan assistance, businesses must:

• Operate for profit 

• Be considered a small business, as defined by SBA 

• Be engaged in, or propose to do business in, the United States or its possessions 

• Have reasonable invested equity 

• Use alternative financial resources, including personal assets, before seeking financial assistance 

• Be able to demonstrate a need for a loan 

• Use the funds for a sound business purpose 

• Not be delinquent on any existing debt obligations to the U.S. government 

Ready to apply?

When you’re ready to apply, you’ll need to gather the appropriate documents. Start the process by working with your local lender within SBA guidelines.

Use the following checklist to ensure you have everything the lender will ask for. Once your loan package is complete, your lender will submit it to SBA:

• Borrower information form: Complete SBA Form 1919 and submit it to an SBA-participating lender.

• Financial statements: Complete SBA Form 413 (personal financial statement). This helps SBA and other stakeholders assess your eligibility.

• Business financial statements: Submit the following to help show your ability to repay a loan:

  • Profit and loss statement – Current within 180 days of your application. Also include supplementary schedules from the last three fiscal years.

  • Projected financial statements – Include a detailed, one-year projection of income and finances and explain how you expect to achieve this projection.

• Ownership and affiliations: Provide a list of names and addresses of any subsidiaries and affiliates, including concerns, in which you hold a controlling interest or that are otherwise connected to you.

• Business license or certificate: Provide a copy of the original business license or certificate of doing business. If your small business is a corporation, stamp your corporate seal on the SBA loan application form.

• Loan application history: Include records of any loans you may have applied for in the past.

• Income tax returns: Include signed personal and business federal income tax returns of your business’ principals for the previous three years.

• Resumes: Include personal resumes for each principal.

• Business overview and history: Provide a history of the business and its challenges. Include an explanation of why you need the SBA loan and how it will help your business.

• Business lease: Include a copy of your business lease, or a note from your landlord, with the terms of the proposed lease.

If you are buying an existing business, gather the following information:

• Current balance sheet and profit and loss statement

• Federal income tax returns for the previous three years

• Proposed bill of sale including the terms of sale

• Asking price with schedule of inventory, machinery and equipment, and furniture and fixtures

• Franchise, jobber, or licensing agreements

• Proof of equity injection

You may be required to submit more SBA forms based on the specific use of proceeds or fees paid on a loans package or to a broker or agent.

If you need help writing your business plan, reach out to us to schedule some time to chat through how we can provide you with the most value!