If you’re applying for a loan from the Small Business Administration (SBA), there’s a good chance that you’ll need a business plan to get approved. An SBA business plan provides a summary of the various aspects of your business, and we will guide you through the process of creating it, from writing your company description and marketing and sales strategies to completing financial data and projections and your executive summary.
Although there is no standard format, and to help you ensure nothing is overlooked, you can use our SBA business plan template above to ensure you cover the most important areas of your company. A well-prepared business plan can improve your chances of getting an SBA loan.
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Step 1: Write the Company Description
This section should contain information about the purpose of your business. It should include a description of the problem or challenge your product or service aims to solve and what types of individuals or organizations will benefit.
A strong company description should also address the following questions:
- Why does your company exist?
- What problems does your business aim to address?
- 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 Organization & Management
Details about the legal and tax structure of your business should be included in this section. It can also be helpful to include an organizational chart of your company. You can include information about each team member’s background and experience and how it is relevant to your company:
- 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)
- Include an organizational chart showing which team members are responsible for the various aspects of your company
- You can include resumes for members of your leadership team highlighting their experience and background
Step 3: Specify the Market Analysis
The market analysis section of your SBA business plan should look at who your competitors will be. Look at what they are doing well, what their weaknesses are, and how your company compares.
The SBA’s market analysis page contains information on how you can approach this. Questions you should also consider addressing should include:
- 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?
Step 4: Write Descriptions of the Products or Services
In this section, you should detail the product or service offered by your business. You should explain what it does, how it helps your customers, and its expected lifecycle. You can also include things like any expected research and development costs, intellectual property concerns such as 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: Indicate the Marketing & Sales Strategy
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: List Financial Data & Projections
If your business has been running, you should include information about its finances. This should include 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 (P&L) statements
- Cash flow statements
- Hard and soft collateral owned by your business
- Business bank statements for the last six 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
You can use our SBA loan calculator to help you estimate monthly payments for the funding you’re currently looking for and projections for any additional loans you may need. Monthly payments can fluctuate depending on the terms of your loan. If you’re looking for accurate estimates, you can read our article on SBA loan rates.
Step 7: Write the 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 in a business plan, should be no more than one to two pages and 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
Depending on the type of SBA loan you’re applying for, certain areas of your business plan may be weighed more heavily than others. You can learn about the SBA loan options you can choose from in our guide on the different types of SBA loans.
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, you can request to be paired with a mentor and get 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, financial management, and more. You can use the SBA’s tool to find your closest SBDC.
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 utilize resources through organizations such as SCORE and the SBA itself.