Businesses applying for a loan through the Small Business Administration (SBA) can benefit from a well-prepared business plan. Using an SBA business plan template can simplify the task of creating a business plan for your business. To assist you, we’ve defined the key components that should be included in your SBA business plan.
What an SBA Business Plan Is
An SBA business plan is a strategic plan that lays out the objectives of your business and how you plan to meet those objectives. Lenders will require an SBA business plan when you apply for an SBA loan, and a well-developed plan will show lenders that your business venture is well thought out.
Why an SBA Business Plan is Important
An SBA business plan is important to your business because it provides a strategic framework of how your business will operate. Taking the time to research your market and consider the various aspects of a business plan forces you to focus on areas of your business operations that you may have otherwise overlooked.
Analyzing each section of the business plan and following an approved SBA business plan template can provide answers to questions you weren’t aware you should be asking. Entrepreneurs that take the time to create a business plan are 16% more likely to succeed than their counterparts that don’t put in the effort.
Small businesses that seek funding, especially in the form of SBA 7(a) loans, will find that SBA lenders require submission of a business plan with their application. Lenders want to be assured you have a viable plan for success. You can be confident that your business plan addresses the most important aspects of your business if you follow an approved SBA business plan template and checklist when creating your plan.
SBA Business Plan Template
An SBA business plan template follows the same format as most traditional business plans and is composed of nine major sections that describe your business. These sections include the executive summary, company description, market analysis, organization, product description, marketing, funding request, and financial projections.
We have created a downloadable checklist to help assist you with creating your SBA business plan.
The key components you need to include in your SBA business plan are:
1. Executive Summary
An executive summary is an introduction to your business plan. This should be a synopsis of the information detailed in your business plan and should highlight salient points important for anyone who reads the document. This summary should not exceed two pages.
The aspects of your business that should be mentioned in the executive summary include:
- Introductory sentence introducing your business, its purpose, and product
- A short description of the business opportunity
- Your target market
- How your product/service meets the needs of the market
- Your business model and who you are
- Market competition
- Your marketing and sales strategy
- Financial projections
- How you will implement your plan
Use only a couple of sentences to address each aspect of your business. You’ll explain each in greater detail in the sections that follow the executive summary. This section of your SBA business plan is an opening overview that sets up the rest of your plan.
2. Company Description
The company description is the area of your SBA business plan in which you will describe what your company does. You should include how your business’s product or service solves a specific consumer problem, who your consumers are, and any competitive advantages your business has. Your company description should emphasize the strengths of your business.
The key aspects of your business that should be addressed in the company description are:
- What your company does
- The products or services your business offers
- What consumer problem your company solves
- Who your consumers are
- What competitive advantages your business has
- Strategic partnerships you may have
Be specific as you discuss these aspects of your business. Be sure to highlight any strengths your business has over its competitors. This section of your SBA business plan lays out the basic framework of your business and sets the stage for the sections that follow.
3. Market Analysis
In the market analysis section of your SBA business plan you will detail the market your business is competing in. This analysis explains to your readers your overall understanding of the current market and how your business fits within this market.
The questions you should address in the market analysis section include:
- What are other businesses in your industry doing?
- What are the strengths of your competitors?
- Are there market trends and themes occurring?
- Why are others successful?
- Can you do what the competitors are doing and do it better?
- Do other businesses have strategic advantages (e.g., ideal location)?
The intent of the market analysis is to show the reader you have done your research on the current market for your product or service. This section speaks to the viability of your business in the current market, the amount of competition, and how you will position your business for success in the industry.
4. Organization and Management
The organization and management section of your business plan is where you will describe how your business is structured. You will want to describe the legal setup of your business (e.g., sole proprietorship, LLC, limited partnership) and what impact that has on your business. Additionally, you will want to include information pertaining to your organizational structure and the management of your business.
The two most important pieces of this section are:
Describe the legal business structure of your company. Will your business be set up as a general or limited partnership, an LLC, sole proprietorship, or be incorporated as a C or S corporation? Describe the legal structure and how this structure will impact your business operations.
As part of the operations and management section of your SBA business plan, you should include a copy of your business’s organizational chart. The organizational chart for your business shows the management and organizational structure of your business. Be sure to include job titles and show the hierarchy of your management structure.
You will also want to describe how the management team of your business will contribute to its success. Provide background of your management teams successes and experience. This information will help convince lenders that you are prepared to run your business successfully.
5. Service or Product
This section of your SBA business plan provides insight into the product or service your business offers. You will want to include information about product pricing, how the product benefits your customers, and the life-cycle of the product. You should also address, in detail, how you will protect intellectual property, and any research and development efforts pertaining to your product.
The aspects of your business that should be discussed in the service or product section of your business plan include:
- Describe the product or service you are offering
- Pricing of your product
- How it benefits the customer
- Explain the product life-cycle
- Plans for handling intellectual property, copyright, and patent filings
- Explain any research and development efforts
Providing additional information regarding how you plan to protect intellectual property will provide funders with the assurance that you have a plan to secure these intangible assets for your business. Additionally, research and development efforts show that you are continually evolving and improving your product or service.
6. Marketing and Sales
The marketing and sales piece of your business plan will explain your marketing plan. This will include how you will attract customers, what your sales process looks like, and how your pricing strategy applies to your sales and marketing efforts. You should also provide details regarding your sales and marketing budgets.
In the marketing and sales portion of your SBA business plan, you should include:
- Describe how you will market toward your target customers
- Describe the sales process
- Provide details about your marketing budget
- Provide details about your sales budget
- Discuss your sales and marketing goals
- Discuss your pricing strategy as it applies to sales and marketing
When describing your sales and marketing goals, in addition to describing the goals, you should also discuss the efforts you will take to meet those goals. Consideration should also be given to how you will track goal progress for both sales and marketing.
7. Funding Request
One of the primary reasons business owners create an SBA business plan is to show lenders they have a viable business. This section of your business plan is used to describe the type of funding you are seeking, the amount of funding you need, and how the funding will be used to grow your business.
The funding request section of your SBA business plan should include:
- The amount of funding you will need over the next five years
- How the funding will be used
- The type of funding you are seeking
- A description of any future financial plans for your business
In addition to your current financial needs, you should also use this section to describe future financial plans, including how you will repay debts. You should address repayment of both existing debt, as well as the repayment of the funding for which you are applying.
8. Financial Projections
The financial projections section of your SBA business plan will provide the reader with the current financial reports for your business, and future projections. This section is intended to convince potential funders that your business is financially stable and projected to remain solvent.
The information that should be addressed in the financial projections portion of your business plan includes:
- Income statements for the last three to five years
- Balance sheets for the last three to five years
- Cash flow statements for the last three to five years
- Any collateral available
- Financial projections for the next five years:
- Projected income statements
- Projected balance sheets
- Projected cash flow statements
- Budgeted capital expenditures
When projecting future financial performance, it’s a good idea to use monthly or quarterly projections for the first year, and annual projections thereafter. Explain how you derived the information you are presenting in your projected financials, and how these projections are tied to your funding requests. Be certain to consider SBA loan rates and the guarantee fee when projecting your new payment amounts.
The appendix of your SBA business plan is the section in which you can include any additional documentation that may be pertinent to your business or that addresses a specific lender requirements. This section may include documents like your credit history, resumes of owners, photos of products, or letters of reference. The appendix is also the proper place to include any legal documents, licenses or permits pertaining to your business.
Common information provided in the appendix of your business plan includes:
- Credit history
- Product photos
- Letters of reference
- Licenses and permits
- Legal documents
Occasionally, a lender may ask you to provide additional information that is not typically part of a business plan, or that you may not have included when drafting your plan. Any information that does not fit into one of the pre-defined sections can be included in the appendix as needed.
Resources to Assist With Creating an SBA Business Plan
There are several resources available to assist with preparing your SBA business plan. The Small Business Administration has a tool on its website to walk you through the process. You can make an appointment with your local SCORE office to speak with one of its business mentors, or you can use a business plan software.
The Small Business Administration
The Small Business Administration offers a multitude of information for small businesses in various stages of development. Among these resources is an entire section on planning your business. To help you create your business plan, the SBA has an online business plan tool which walks you through the process step-by-step.
SCORE is a nonprofit organization that partners with the SBA to provide resources to small business owners. With locations nationwide, SCORE offers mentoring, online resources, webinars, and local events. Whether you choose to meet with a local mentor, or take an online course on developing a business plan, SCORE is a great resource for small business owners.
Business Plan Software
Using a business plan software like that offered by LivePlan can take much of the frustration out of creating a business plan. One of the benefits of using a business plan software is the polished look of the finished plan. Business plan software guides you through the various pieces of the business plan and offers a user-friendly interface for formatting your business plan.
SBA Business Plan Template Frequently Asked Questions (FAQs)
A lot of information has been covered about using an SBA business plan template, why a business plan is important, and what information you should include in your plan. If you have questions about any of the information presented here, you can post them in the Fit Small Business forum.
Some frequently asked questions pertaining to SBA business plans include:
How do I write a business plan for a small business?
A business plan lays out the future of your business, the goals of your business, and how you intend to reach those goals. There are several business plan templates available, and business plan software that can assist you with the task of writing a business plan.
What should you include in a business plan?
Your business plan should provide a comprehensive overview of your business. It includes details regarding the product or service offered, your competition, management, marketing, and financial projections for your business. Anyone who reads your business plan should have a clear indication of what your business is, how it’s performing, and your goals for the future.
How do I write a simple business plan?
A simple business plan, sometimes referred to as a lean business plan, can condense a business plan into one page or less. Instead of delving into the minutiae of your business, a lean business plan highlights key points such as your mission, product, marketing and sales goals, and a high-level overview of financial projections.
Using an SBA business plan template can help ensure that you have addressed all the required information in your business plan when applying for an SBA loan. Business plans address all the major aspects of your business and serve as a road map for how the business will be run. A well written SBA business plan can assist you in obtaining the funding your business needs.