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If you are applying for a loan through the Small Business Administration (SBA), a business plan will likely be a required component of your loan application. Your SBA business plan should provide an overview of your company’s goals and how it plans to achieve them.
There is no standard format for an SBA business plan, but it should contain enough information that a potential investor or lender can make an informed decision as to the likelihood of your company’s continued success. We recommend using our SBA business plan template above to ensure you cover the most critical components.
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Business Plan Section | Purpose |
|---|---|
Executive Summary | Gives a summary of your company’s goals and how it plans on achieving them |
Company Description | Details the company’s background, products, and services offered |
Organization & Management | Provides an organizational chart or legal structure of your business, key personnel, and other resources |
Market Analysis | Describes the competitive landscape, such as major competitors, trends, and competitive advantages |
Service or Product Offered | Gives detailed information on how your product or service works, such as specifications, drawings, and performance data |
Marketing & Sales | Lays out your intended audience and strategies on how you’ll attract customers |
Finance Data & Projections | Details your company’s financial position, as well as current and projected data for revenue and expenses |
Funding Request | Answers the question of why you need funds, what the money will be used for, and the expected return on investment |
Appendix | Is a compilation of supporting data, charts, or other information referenced in the above sections |
Step 1: Write a Description of Your Company
This section of your SBA business plan should address your company’s purpose, its goals, and how they’ll be met. Provide background information to describe why your company exists, any problem or challenge it aims to solve, and how customers can benefit from its products or services.
A strong company description should also address the following questions:
- What prompted you to start your business?
- What organizations or individuals will benefit from your company’s product or service?
- What makes your company different from others?
- What competitive advantages does your business offer?
- What would a successful product launch look like?
- Does your company have strategic partnerships with other vendors?
Step 2: Identify Organizational Structure & Management
Your SBA business plan should outline how your company is organized from both a tax and legal structure. Including an organizational chart can help show the individuals responsible for different areas of your business. You can also include information about the background of key members of your leadership team.
Consider also addressing the following items:
- Highlight what business structure you have selected and why. Examples commonly include a sole proprietorship, limited liability company (LLC), partnership, S Corporation (S-corp), and C Corporation (C-corp).
- Detail any potential legal protections or tax savings you expect based on the tax structure you’ve chosen.
- Include resumes for members of your leadership team highlighting their experience and how it’s relevant to the goals of the organization.
Step 3: Outline Your Market Analysis
The market analysis section of your SBA business plan should look at who your competitors will be. Observe what they are doing well, their weaknesses, and how your company compares. Insights from this evaluation can provide a good foundation for identifying opportunities and consumer needs that aren’t currently being met.
The SBA’s market analysis page contains information on how you can approach this. Questions you should also consider addressing should include the following:
- Who are the major competitors in the market?
- What are competitors doing well, and are there areas for improvement?
- How does your company compare to the top competitors?
- How has the product or service evolved over time?
- Are there any trends for supply and demand throughout the year?
- What can your company do to stand apart from the top competitors?
- Are existing customers satisfied with the current offering of products and services?
Step 4: Write Descriptions of Your Products & Services
In this section, you should detail the products or services your business offers. You should explain what it does, how it helps your customers, and its expected lifecycle. Include things like any expected research and development costs, intellectual property concerns (e.g., patents), what the lifecycle of your product looks like, and what is needed to manufacture or assemble it.
Here are some things to consider as you are working on this section:
- Description of what your product or service does
- How your product or service works
- How your customers will benefit from your product or service
- Illustration of the typical lifecycle
- Any patents or intellectual property you or your competitors have
- Pricing structure
- Plans for research and development
- Discuss plans for handling intellectual property, copyright, and patent filings
Step 5: Describe Your Marketing & Sales Strategies
Details of your marketing and sales strategy will be highly dependent on your business. It’s also something that may evolve and change over time in response to things like the overall economic environment, release of competitor’s products or services, and changes in pricing.
With that being said, here is a list of some items that should be addressed:
- Who is your target audience?
- How will you attract customers?
- How and where will sales be made?
- If applicable, what will the sales process look like?
- Where will you market and advertise your product or service?
- How does your marketing strategy compare to other companies in the industry?
- How much should you spend on marketing?
- What is the expected return on investment for marketing?
- Do you have any data showing the effect of marketing?
Step 6: Provide Financial Data & Projections
If your business has been operational, you should include information about its finances. This should consist of all streams of revenue and expenses. Data for financial projections should also be included, along with a description of the methodology you used to reach those conclusions.
If available, you should be prepared to provide the following financial documents for at least the last three years to five years:
- Personal and business tax returns
- Balance sheets
- Profit and loss statements
- Cash flow statements
- Hard and soft collateral owned by your business
- Business bank statements for the last 6 to 12 months
Financial projections should include enough data to offer some confidence that your business is viable and will succeed. It’s recommended that you provide monthly projections looking forward at least three years, with annual projections for years four and five.
- Projections for revenue and methodology used in arriving at these figures
- Expected shifts in revenue or expenses as a result of seasonality or other factors affecting supply and demand
- Expected expenses from loan payments, rent, lease payments, marketing and advertising fees, employee salaries, benefits, legal fees, warranty expenses, and more
Step 7: Detail Your Financing Request
This section is where you should specify how much funding you need, why you need it, what you’ll use it for, and the impact you expect it will have on your business. It’s also a good idea to indicate when you expect to use the funds over the course of the next three to five years.
Here is a checklist of some important items you should cover:
- How much funding you need and why
- When you will use the funds over the next three to five years
- What you will use the funds for
- The expected impact this will have on your business and how it will help reach your business goals
- The anticipation of any recurring needs for additional funding
- Your strategy for how you expect to pay off the loan
- Any future financial plans for your business
Step 8: Fill in the Appendix & Supplemental Information
This last section of your SBA business plan should include any additional information that may be helpful for lenders. This can include more detailed explanations or clarifications of data from other sections of your business plan.
Here are some examples of documents you can include:
- Business licenses
- Certifications or permits
- Letters of reference
- Photos of products
- Resumes of business owners
- Contractual agreements and other legal documents
- Patents
Step 9: Complete the Executive Summary
The executive summary, which is the first section of a business plan, should be no more than one to two pages long and should provide a high-level overview of the items listed below. Since each section above is already detailed, a brief description of those sections will be sufficient.
- Your company’s mission statement
- The background and experience of your leadership team
- The product or service and what purpose it serves
- Your target market for the product or service
- Competitive analysis of other products and services
- Your competitive advantage or why your company will succeed
- Marketing and sales strategy
- Financial projections and funding needs
Additional Resources for Writing an SBA Business Plan
If you’re looking for additional resources to help you write a business plan, you can consider the options below. Since a business plan is just one of many documents you’ll need, you can also read our guide on how to get an SBA loan if you need help with other areas of the loan process.
- SBA: SBA’s business guide contains information on how you can start a small business. It includes steps on creating a business plan, funding your company, and launching a business.
- SCORE: Through SCORE.org, you can request to be paired with a mentor and receive business-related education. Educational courses come in several formats, including webinars, live events, and online courses.
- Small business development center (SBDC): SBDCs provide training and counseling to small business owners. This can help with various aspects of your company, such as getting access to working capital, business planning, and financial management. Use the SBA’s tool to find your closest SBDC.
Frequently Asked Questions (FAQs)
If your business plan is up-to-date, you may be able to reuse it for your SBA loan application. In general, you should consider updating your business plan each year or once any major changes have taken place to ensure that investors and lenders have the most updated information.
A general rule of thumb is to have a business plan anywhere from 15 to 50 pages. However, this can vary from company to company, and we recommend focusing instead on ensuring it covers all of the necessary details for the various sections. Find the right balance between thoroughness and conciseness, as providing too many details can lead to lenders or investors glossing over important data.
A business plan helps a lender determine whether your company is likely to succeed. This, in turn, allows it to determine whether or not you can repay loan proceeds, as well as the interest rate that you qualify for, based on its overall risk assessment.
Bottom Line
Having a strong SBA business plan can improve your chances of getting approved for an SBA loan. If you’re unsure where to start, you can use our guide and template to cover the most important aspects of your business. You can also see our tips on how to get a small business loan. To get even more ideas on creating a strong business plan, you can also use resources through organizations such as SCORE and the SBA itself.
