sba 7a loan business plan template

Financing | Templates

How To Write an SBA Business Plan [+Free Template]

Published June 13, 2023

Published Jun 13, 2023

REVIEWED BY: Tricia Jones

WRITTEN BY: Andrew Wan

This article is part of a larger series on Business Financing .

• 1. Write the Company Description
• 2. Identify Organization & Management
• 3. Specify the Market Analysis
• 4. Write Descriptions of the Products or Services
• 5. Indicate the Marketing & Sales Strategy
• 6. List Financial Data & Projections
• 7. Write the Financing Request
• 8. Fill In the Appendix & Supplemental Information
• 9. Complete the Executive Summary
• Additional Resources

Bottom Line

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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.

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

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 .

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.

About the Author

Find Andrew On LinkedIn

Andrew Wan is a staff writer at Fit Small Business, specializing in Small Business Finance. He has over a decade of experience in mortgage lending, having held roles as a loan officer, processor, and underwriter. He is experienced with various types of mortgage loans, including Federal Housing Administration government mortgages as a Direct Endorsement (DE) underwriter. Andrew received an M.B.A. from the University of California at Irvine, a Master of Studies in Law from the University of Southern California, and holds a California real estate broker license.

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How to Write an SBA Business Plan + Template

Noah Parsons

10 min. read

Updated November 21, 2023

Applying for a Small Business Administration loan typically requires a business plan.

Unfortunately, there’s no SBA loan business plan format that guarantees approval. The SBA even states you should “pick a business plan format that works for you.” 

While I agree with this sentiment, I’ve found that entrepreneurs who explain how funds will be used and how they will repay the loan tend to be more successful. 

Luckily, these details can be covered using our SBA-lender-approved business plan format . I’ll go over that structure in this article, and focus on the sections that the SBA prioritizes, so you can maximize your chances of getting funded .

You can even download a free SBA-lender-approved business plan template to fill out as you read. 

Let’s get started.

• Why you need a business plan for SBA loans

SBA loans require good documentation of your business and personal finances. You’ll need to pull together your past tax returns, bank statements, and various application forms depending on the type of SBA loan you apply for.

The bank issuing the loan will also want to know about the future of your business. 

They’ll want to see how the loan will be used and if future cash flow projections are realistic and indicate you can afford loan payments.

That’s where writing an SBA business plan comes in. 

Not only will your business plan describe your business to the lender, but it will include the financial projections the bank will use to determine if you qualify for the loan .

• What your business plan should include, according to the SBA

Business plans for SBA loans follow a fairly standard structure, but that doesn’t mean you need to follow it exactly. 

The SBA even recommends adjusting the plan outline to serve your needs. If a section does not apply to your business, it’s fine just to remove it.

Here’s the successful business plan structure I recommend for SBA loans:

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1. Executive summary

A great executive summary is a short, simple overview of your business. It should be easy for a loan officer to read and clearly understand what your business does. 

When applying for an SBA loan, highlight your: 

• Business opportunity
• Financial forecast
• How much money you want to borrow and how it will be used

Remember, an executive summary should be short and to the point. The rest of your business plan will provide additional details.

[Dig deeper: How to write an executive summary ]

2. Company description

Some people call this section “Products and Services.” Either option is fine. The important thing is that you use this section to explain what your business opportunity is. 

You need to cover: 

• The problem you solve
• Who you’re solving it for
• What your solution is and why it’s better

Be specific and tell the story of your business and your customers. Focus on your strengths and what sets you apart from competitors. 

If your company is developing a product, include information on:

• What the product life cycle looks like
• Intellectual property filings
• Current research and development

If these topics don’t apply to your product, that’s fine. Just be sure that the description of what you sell is clear.

3. Market analysis

The market analysis chapter explains who your customers are. It provides an overview of your target market, competition, and industry.

Your target market is essentially a description of your ideal customers. Be sure to include specific demographic information (like age, gender, location, income) and psychographic information (hobbies, purchasing behaviors). 

This data should reinforce that your target market needs your solution .

It’s helpful to also include information on the size of your target market . Lenders will want to see evidence of enough potential customers to drive growth. 

While your target market information describes your customers, an industry overview discusses the type of business you’re in and its potential for growth. 

For example: If you’re starting a fast-casual restaurant, your industry overview might discuss the increased interest in fast-casual dining and how more people are eating in these types of restaurants every year. 

Finally, you’ll need to include a competitive analysis . This is a list of current competitors and alternatives, with explanations of why your business is a better option. 

Your goal is to show how your business is unique, what opportunities and threats there are, and how you plan to address the competition.

4. Organization and management

Also known as your company overview, this section is where you describe your legal structure, history, and team .

For your SBA loan application, you should focus on describing who is managing the business as clearly as possible. 

You may want to include an organizational chart. You should provide detailed resumes for everyone in leadership positions. Each team member’s experience, skills and professional qualifications can mitigate risk in the eyes of a lender .

To show you’re thinking ahead, it’s also helpful to include key positions you plan to fill as you grow. 

5. Sales and marketing plan

Your goal in this section is to summarize how you will attract, retain, and sell to your customers.

The marketing strategies and sales methods you describe should always have the customer top of mind, and demonstrate that you know how to connect with them. 

To help a loan officer visualize this, you can provide examples of marketing messaging, visuals, and promotions. If you have any research or results to show that your strategy has merit, include those as well. 

6. Financial projections

SBA lenders typically require 5 years of financial projections — including profit and loss statements , balance sheets , and cash flow statements . 

Be sure to include the SBA loan in your projections in the following areas: 

• A liability on your balance sheet.
• Payments on your cash flow.
• Interest expenses on your profit and loss statement. 

I’ll dive into specific details of what you should focus on in the “how to improve your chances” section.

Your first year of financial projections should include monthly details. After that, annual summaries are usually sufficient for most SBA lenders. Occasionally, a lender might require 24 months of monthly projections, so check with your bank before submitting your business plan. 

If your business is up and running, you must also provide historical financial reports for the past 12-24 months of operations—including income statements and a current balance sheet.

Typically, you will also need to provide reports on your personal finances , including any assets you have, such as a home or car. 

Finally, include a section explaining your use of funds—what exactly you plan to use the loan for.

7. Appendix

The appendix is your chance to provide additional documents that support sections of your business plan. 

When applying for a loan, these may include:

• Employee resumes
• Licenses and permits
• Patents and other legal documents
• Historical financial statements
• Credit histories

Don’t worry about stuffing your appendix full of additional documentation. Only include information if you believe it will strengthen your approval chances, or if your lender specifically asks for it.

• How to improve your chances of being approved for an SBA loan

Your SBA business plan needs to focus on the loan you are applying for and how that will impact your business financially. 

Make sure to include the following information in your financial plan to increase your chances of success with your lender:

Funding request 

In your executive summary, document how much money you are asking for. It’s best to put your number where it can be clearly read, instead of trying to bury it deep within your business plan.

Remember, there are limitations to how much you can borrow through SBA-backed loans.  Most have a maximum loan amount of $5 million, while SBA Express loans have a maximum loan amount of $350,000. 

Use of funds

You should also describe how you plan to use the loan and which aspects of the business you want to invest in. 

Some SBA loans are designed specifically for expanding export businesses or funding real estate transactions. So, make sure your use of funds description is appropriate for the loan you are applying for.

Cash flow forecast

Be sure to include the loan in your cash flow statements and projections . You want to demonstrate that you’ve planned how you will use and repay the loan.

You need to show:

• When you anticipate receiving the loan.
• How the loan will impact your finances. 
• Loan payments for the life of the loan. 

Having this prepared won’t just increase the chances of your application being approved—It  will make it much easier to manage the loan after you receive funding . 

Balance sheet 

You’ll also want to put the loan on your projected balance sheet , and show how the loan will get paid down over time. 

The money you owe will show up on your balance sheet as a liability, while the cash you receive from the loan will be an asset. Over time, your forecasted balance sheet will show that the loan is getting paid back. 

Your lender will want to see that you have forecasted this repayment properly.

Profit & Loss forecast

Your P&L should include the interest expenses for the loan, and show how the interest will impact your profitability in the coming months and years.

• How long does an SBA business plan need to be?

The SBA doesn’t have an official recommended or required business plan length . As a general rule of thumb, you should make your business plan as short and concise as possible. 

Your business plan is going to be reviewed by a bank loan officer, and they will be less than excited about the prospect of reading a 50-page business plan.

If possible, keep the written portion of your business plan between 10-15 pages. Your financial forecasts will take up several additional pages. 

If you’re struggling to keep it short, try a one-page plan

A great way to start your business plan is with a simple, one-page business plan that provides a brief and compelling overview of your business. 

A good one-page plan is easy to read and visually appealing. Once you have your one-page plan, you can expand on the ideas to develop your complete written business plan, and use the one-page plan as your executive summary. 

Loan officers will appreciate a concise overview of your business that provides the summary they need before they start looking at your complete business plan and financial plan .

• Resources and tools for writing an SBA business plan

Remember, you can download a free SBA-lender-approved business plan template . It includes detailed instructions to help you write each section, expert guidance and tips, and is formatted as lenders and investors expect.

If you’re looking for a more powerful plan writing tool, one that can also help you create financial forecasts for the use of your loan, I recommend you check out LivePlan . 

With LivePlan, you get:

• AI-powered recommendations: Generate and rewrite sections of your plan to be more professional and persuasive.
• Step-by-step instructions: In-app examples, tutorials, and tips to help you write an impressive business plan.
• Automatic financials: Skip the spreadsheets and complex formulas, and quickly create accurate financial forecasts with everything a lender needs.
• A built-in pitch presentation: Print or share your full business plan, one-page pitch, and financial reports—all with a professional and polished look.

Whether you use the template, LivePlan, or try writing a business plan yourself, following the structure and tips from this article will improve your chances of getting an SBA-backed loan. 

And for additional SBA-focused resources, check out our guide on how to get an SBA loan .   

Create a business plan that maximizes your chances of securing funding

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

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SBA Business Plan Template: Full Guide [2023]

• January 12, 2023
• Small Businesses

In 2020, SBA’s flagship 7(a) loan program approved more than 42,000 loans totalling $22 billion . Yet, SBA loans are notoriously difficult to obtain for small businesses: less than 15% of SBA loan applications were granted by big banks. If you’re applying for a SBA loan , you will need a solid business plan template for your loan application.

In this article we go through, step-by-step, all the different sections you need in your business plan to build a complete, clear and solid business plan lenders will approve. Read on!

Why do you need a business plan for your SBA loan application?

Other than your basic eligibility requirements, the primary element that lenders would review is your business plan. Having a good business plan determines if your business is a lucrative opportunity for SBA lenders.

Also, a solid business plan makes it easier to get your loans approved because banks would be confident that your business would be successful and you would be able to repay your loan.

However, business plans tend to differ depending on the nature and status of your business. If you’re running an independent business or launching a startup for example, your business plan will be reviewed more thoroughly.

1. Executive summary

The executive summary is the most important page of your SBA business plan template . We can’t make this clearer. This is the first section that the lenders will have a look at.

Before we go into specifics, keep in mind the executive summary actually is a summary. Keep it brief: your executive summary should never be more than 2 pages maximum .

Your executive summary should consists of 5 parts:

• The “mission statement “: what problem(s) is your business solving?
• Product and service : what is it that you sell? to whom? where?
• People : who are the founders / management? What about their experience? How many people / teams do you employ?
• Key financials and projections : what are your key metrics and financials today (revenues, customers, etc.)? What do you expect these to be in 3/5 years from now?
• Funding ask : what (how much) are you asking as part of this loan? Where will you spend it? For what?

2. Company description

The company description is where we go into more details about your business, and which problem(s) it actually solves.

You should explain here clearly:

What is the problem at stake?

You should list here the 2/3 friction points you aim to tackle.

Remember: even if your business isn’t necessarily innovative, your business is potentially solving a problem, as obvious as it may be, for many people out there. The more obvious the problem is, the more people it affects, the better

What is your solution?

Your business is commercialising a product and/or a service which solves the problem mentioned above. Here, you should explain 2 things: how your product / service works, and what benefits it brings to your customers.

Ideally, you should compare the pain points explained earlier (the problem) to the benefits your solution brings to your customers. That way, it is crystal clear to lenders and investors your solution really adds value to potential customers .

When explaining your business’ solution, you should explain clearly who is your customer persona . In other words, who are your customers (or who do you think they will be)? Which gender, age range, social background, interests, etc?

Where are you going?

The third section of the company description should explain what your strategy is in the short to long term. Are you expecting to launch new products? To expand regionally, internationally? Etc.

3. Market plan and analysis

The market plan and analysis section tell investors and lenders that you have extensively studied the market and reveal your competitive plan.

Your market plan and analysis section should include the following:

Industry overview and outlook

Here you need to clearly identify 2 very important metrics:

• Market size : how big is your market?
• Market growth: how fast does your market grow?

If you are operating in a niche market, chances are that you will face some challenges: the information might not be publicly available. In any case, you should be able to make a high-level estimation of your market. Read our article on market sizing and how to estimate TAM, SAM and SOM for your startup .

When looking for these metrics, you have multiple sources of information: public reports, specialised press, etc. Even public companies publish press releases and annual reports including some of their proprietary market estimates so be sure to look there too.

Competitive landscape

Here we must answer 2 key questions:

How fragmented is your market?

Are there 3 big players sharing 90% market share or thousands of small players? Here, refer to public market reports and your own understanding of the competitive landscape .

A few questions you could ask yourself, among others:

• Who are your competitors?
• Are they local, regional, national or global?
• Are there any product alternatives to your product?
• What about their IP / technological advantage?

Where do you position yourself vs. competition?

Is your solution a game changer other competitors don’t have (yet)? Do you have competitors with similar products/services?

Ideally, you would create a small table with, for each type of competitors and their main characteristics.

For instance, do they all a global presence? Do they cover all the products you offer? What is their relative price positioning (expensive vs. accessible)?

4. Organization and management

The amount of details you need to include here varies depending on the size of your company.

No matter how many leadership roles there are, an organizational chart effectively shows lenders and investors how the management system is structured.

If you plan on running your business alone indefinitely, you can write a short paragraph explaining your qualifications and previous professional experiences.

The first thing you should include in this section is a list of each management position. This list includes who will fill the role and the qualifications of these people. These people are the heart of your company, and their skills and experience are vital in ensuring your company’s success.

Next, provide any additional information about how the management team will contribute to the business’s success. Be sure to give as many details as possible since lenders need to be comfortable and confident that you have a good team running your business.

Lastly, include information about the Board of Directors (and/or any other advisors to your business).

5. Service or product line

The level of detail and the content of this section changes depending on the type of business you have. A number of questions you need to answer are shown below (but not limited to):

• Are you selling products or services (or both)?
• How many products do you sell?
• What are they?
• What is their pricing?
• How do they work?
• Are your products protected by any kind of intellectual property (copyright, patent, etc.)?
• If you do not manufacture all of your product(s): who are they suppliers? Where do they fit in the value chain ? etc.

Expert-built financial model templates for tech startups

6. Marketing and sales

Your SBA business plan template should include a marketing and sales plan where you describe your strategy for acquiring potential clients.

Here, you should give details about your marketing plan. A few questions you should answer are:

• How you plan to build and support your sales strategy ?
• What channel(s) are you using (online vs. offline)?
• How it makes sense for your target audience (the customer persona mentioned above)?

What about your metrics?

Sales and marketing goals and KPIs are also provided in this section. Don’t forget to include a detailed report about budgets for both sales and marketing.

Include metrics such as conversion rate, customer acquisition cost (CAC) , the efficiency of your sales team, etc.

It’s ok if you don’t know them already (if you are about to launch you new venture for example), yet you should have at least targets for them. How many website visitors do you expect to generate next year? What is your target conversion rate? Etc.

This particular report would be of great interest to lenders since they will glimpse how you handle your budget. Indeed, if you expect to spend in average $100 Customer Acquisition Cost, lenders will tie the number into your financial projections later on (more on that below).

Proving lenders you are able to link your financial projections with your actual business metrics (customers, sales volume, etc.) is a big plus . Indeed, that way you will show lenders you understand very clearly your business and how it ties into your financials (more on that in our article on why you should build a solid financial projections ).

7. Funding request

The funding request is the section of your SBA business plan template where you communicate to your investors how much you need.

This report also includes how you plan on repaying your loan. It’s also essential to explain how you plan to spend the funding you’ll receive for your business.

Will you spend the loan in working capital , in equipment, in inventory, salaries or marketing costs? The more specific you are, the better.

If you haven’t done so, we really recommend you read our article on how to determine how much you should raise for you business . While raising too little creates obvious problems, raising too much isn’t necessarily better.

On top of the amount, a good practice is to include a pie chart of where you will spend that money over a given period (your runway). Will you spend the bulk of it in product development to build your MVP? Or will you use a large portion in sales & marketing to commercialise your product and find product-market fit?

Our financial model templates include a cash burn dashboard where you can easily assess how much you should raise, and where you will spend your money. We also included charts ready to be included in your pitch deck. See how to use our cash burn dashboard here .

The funding request usually includes an overview of the business. You also have to outline how much funding you need for the next five years.  The standard timeframe for repaying your loan is usually ten years, so lenders expect to see some success in your business by that time. Mention a  detailed explanation of how the funds will be used and strategic financial plans for the future here.  Include financial information for current operations if applicable.

8. Financial projections

The financial projections section of your SBA business plan is one of the most important one.

Why? Lenders will have a thorough review of your expected financials over the next 3 to 5 years and judge whether your financial projections:

Are realistic (and use verifiable assumptions)

We are all by nature optimistic, especially when we are running businesses. It’s good to be optimistic, yet it is another one to be unrealistic.

Also, when presenting your financial projections, make sure to make it clear what are your assumptions. The more sources you can find to back up your forecasts, the better.

If you need help building realistic projections for your business, we have lots of free content. Make sure to check out our guides below:

• The 5 Mistakes To Avoid For Your Startup Financial Plan
• How To Build Realistic Revenue Projections For Your Startup?

Allow you to repay the SBA loan in the future

It’s great if you have built rock-solid and realistic financial projections for your business plan. Yet, if your plan doesn’t allow you to meet your debt obligations (the SBA loan and any other debt your business might have), lenders will not grant you any loan.

When assessing whether your financial plan allows you to repay the debt, you should check if the positive cash flows your business generates are enough to cover your debt repayment (and interests).

What financials should you include?

In short, you should present 3 different set of financials:

• Profit-and-loss
• Balance sheet
• Cash flow statement

If you don’t know them already, these are the financial statements every business need to prepare at least annually (with the help of an accountant). For more information on what they are and how to prepare them, read our articles below:

• 4 Key Financial Statements For Your Startup Business Plan
• SBA Loan Application: 6 Steps To Build Solid Financial Projections

9. Appendix

This section is the best place to add supporting documents like charts, graphs, and data.

For example, a complete list of documents like licenses, contracts, maps, etc. makes you more attractive to lenders as it gives them more content to review. If you do so, make sure to reference the documents in appendix and link them to pages in earlier sections. Avoid using the appendix as a dump section: it should be well organised and structured (else no one will bother looking at it).

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SBA 7(a) Business Plan

Sep.05, 2023

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Table of Content

If you own a small business and need money, you might have heard about the SBA 7(a) loan program. It’s a helpful way for the U.S. Small Business Administration (SBA) to get money for your business to start, grow, and do well. This article will tell you about the SBA 7(a) Business Plan , who can get it, how to use it, how to apply it, the different types, how to pay it back, and how to make a business plan. 

You can also refer to our loan officer business plan here.

Definition of SBA 7(a) Loan

The 7(a) loan is the SBA’s primary loan program to help small businesses. The SBA does not give loans directly to businesses. Instead, it guarantees part of the loan from a participating lender. This makes lenders more willing to provide loans to small businesses.

The SBA 7(a) loan program allows up to $5 million, with SBA guaranteeing 85% for loans under $150,000 and 75% above. Interest rates are negotiated between lender and borrower. Still, they must be within SBA maximums based on the prime rate plus an additional amount depending on the individual loan amount and term.

7(a) loans can be used for:

• Buying, improving, or refinancing real estate and buildings
• Short- and long-term working capital
• Refinancing current business debt
• Buying equipment
• Buying furniture, fixtures, and supplies
• Business acquisition
• Multi-purpose loans

SBA 7(a) Loan Eligibility

Your business must meet specific SBA criteria to qualify for a 7(a) loan. These include:

• Be an operating business
• Operate for profit
• Be located in the U.S.
• Be small under SBA Size Requirements
• Not be a type of ineligible business
• Not be able to obtain the desired credit on reasonable terms from non-Federal, non-State, and non-local government sources
• Be creditworthy and demonstrate a reasonable ability to repay the loan

Some businesses are not eligible for a 7(a) loan , such as:

• Non-profit businesses (for-profit subsidiaries are eligible)
• Lending institutions like banks, finance companies, factors (except certain pawn shops)
• Passive real estate companies not actively occupying or using assets acquired with loan proceeds (except Eligible Passive Companies)
• Life insurance companies
• Foreign businesses (U.S. businesses owned by aliens may qualify)
• Pyramid schemes
• Businesses earning over 1/3 of revenue from gambling
• Illegal businesses
• Private clubs limiting memberships
• Government-owned entities (except Tribal)
• Loan packagers earning over ⅓ of revenue from SBA loans
• Businesses with owners incarcerated, on probation/parole, or indicted for financial crimes
• Businesses owned by lenders or CDCs
• Adult entertainment businesses
• Defaults on previous government loans (waivers available)
• Political or lobbying businesses
• Speculative businesses like oil wildcatting

The SBA also considers other factors such as your industry, management experience, market potential, collateral, and equity contribution.

Using the SBA 7(a) Loan

The 7(a) loan can be used for various purposes related to your business operations and growth. 7(a) loans can be used for:

• Acquiring, refinancing, or improving real estate and buildings
• Purchasing and installing machinery and equipment
• Facilitating ownership changes
• Multipurpose loans that combine several eligible uses

The 7(a) loan program has certain restrictions on the use of funds. Four key restrictions of use of SBA 7(a) loan include:

• Personal expenses or dividends
• Repaying delinquent taxes or debts owed to the government
• Financing illegal activities or unapproved products/services
• Influencing any federal employee or official

The SBA also has some specific requirements and guidelines on how you can use the SBA 7(a) loan funds for certain purposes, such as:

• Working Capital: Can be used for short-term needs like inventory, payroll, and marketing. It cannot be used for permanent working capital or fixed assets.
• Debt Refinancing: Can refinance existing business debt if current and not guaranteed by a federal agency. Cannot refinance to get a lower interest rate or longer maturity.
• Real Estate: Can purchase or improve real estate used by the business. Must occupy at least 51% of existing property or 60% of new construction.
• Equipment: Can purchase or install essential business equipment with a useful life of at least ten years that will be depreciated over that period.

Applying for the SBA 7(a) Loan

Sba 7(a) loan application requirements.

To apply for a 7(a) loan, you must submit a loan application package to an SBA-approved lender. The lender will review your application and decide whether to approve it. The SBA will also review your application and decide whether to guarantee it.

The loan application package generally consists of the following documents and information:

• SBA Form 1919 – Borrower Information Form
• SBA Form 1920 – Lender’s Application for Loan Guaranty
• Business plan – A document that describes your business goals, strategies, market analysis, financial projections, and operational details
• Personal financial statement – A document that shows your personal assets, liabilities, income, and expenses
• Business financial statements – Documents that show your business income, expenses, assets, liabilities, and cash flow
• Tax returns – Copies of your personal and business tax returns for the past three years
• Collateral – Documents that show the value and ownership of the assets you are pledging as security for the loan
• Lease agreements
• Purchase agreements
• Franchise agreements
• Licenses and permits
• Contracts and invoices
• Resumes and references

Depending on the size and complexity of your loan request, your lender may ask for additional documents or information.

SBA 7(a) Loan Application Process

To apply for an SBA 7(a) loan, you must follow some steps and meet some requirements. Here is what you need to do and what you need to know:

1. Find a SBA 7(a) Lender

You can search for an SBA-approved lender online or contact your local SBA district office for referrals. You can also use the Lender Match tool offered by SBA to connect with lenders that offer 7(a) loans.

2. Prepare your application

You will need to gather all the required documents (See the SBA 7(a) Loan Submission Checklist for specifics) and information and write a business plan for your SBA 7(a) loan proposal. You can use resources like SBA’s Business Plan Tool to help you create a professional and comprehensive plan.

3. Submit your application

You will apply for your loan directly through your lender. You can submit your loan application package to your lender online or in person. Your lender will review your application and perform a credit analysis and due diligence. The lender may also ask you for additional information or documents if needed.

4. Wait for the approval

Based on their criteria and policies, the lender will decide whether to approve or decline your loan request. The SBA will also decide whether to guarantee or decline your loan request based on their eligibility requirements and guidelines. The decision time may vary from a few days to weeks, depending on the 7(a) loan type and the lender’s processing method.

5. Close the loan

Once you receive the SBA’s approval, you must sign the loan agreement and other closing documents with your lender. You will also need to pay any fees or charges associated with the loan. Your lender will disburse the funds according to the agreed schedule and purpose.

Types of SBA 7(a) Loans

The SBA offers several types of 7(a) loans to meet the diverse needs of small businesses. Each type has its features and benefits. Some of the most common types of 7(a) loans are:

Standard 7(a) Loans

Standard 7(a) Loans are 7(a) loans over $500,000, excluding 7(a) Small, SBA Express, Export Express, CAPLines, EWCP, International Trade loans, and Pilot Programs.

Key Features:

• Loan Amount: $500,001 to $5 million
• Maximum SBA Guarantee: 75%
• Interest Rate: Negotiable up to SBA maximum
• Revolving Lines of Credit: Only for SBA Express, Export Express, CAPLines
• SBA Turnaround Time: 5-10 business days
• Required Forms: SBA Form 1919
• Collateral: Fully secured if the lender takes security interests in all assets acquired, refinanced, or improved with the 7(a) loan, plus available fixed assets, up to the loan amount.
• Other Conditions: See SOP 50 10
• Credit Decision: By SBA or PLP lenders with authority to process, close, service, and liquidate without SBA review.

7(a) Small Loans

7(a) Small Loans are term, non-revolving 7(a) loans of $500,000 or less, excluding Standard 7(a), SBA Express, Export Express, CAPLines, EWCP, and Pilot Program loans.

• Maximum Loan Amount: $500,000
• Maximum SBA Guarantee: 85% for loans ≤ $150,000; 75% for loans > $150,000
• SBA Turnaround Time: 2-10 business days
• Loans ≤ $50,000: No collateral required, except for International Trade loans
• Loans $50,001 – $500,000: Lender follows own collateral policies for similarly-sized non-SBA loans; cannot decline solely due to inadequate collateral
• Credit Decision: By SBA or delegated lenders authorized to process, close, service, and liquidate without SBA review

SBA Express Loans

The SBA Express program allows lenders to use their own processes and procedures in exchange for a lower SBA guarantee percentage.

• Maximum SBA Guarantee: 50%
• Revolving Lines of Credit: Up to 10 years
• Forms: Lender uses own forms, plus SBA Form 1919
• Loans ≤ $50,000: No collateral required
• Loans > $50,000: Lender collateral policy applies, except loan cannot be declined solely for inadequate collateral
• Credit Decision: Made by the lender

Export Express Loans

The Export Express program guarantees smaller revolving lines of credit or term loans to help small businesses expand exporting. It offers streamlined features like SBA Express, with higher guarantees to mitigate international risk.

• Maximum SBA Guarantee: 90% for loans ≤ $350,000; 75% for loans > $350,000
• Revolving Lines of Credit: Up to 7 years
• Loans > $50,000: Lender policy applies; cannot decline solely for inadequate collateral

Export Working Capital Loans

The 7(a) Export Working Capital Program (EWCP) provides loans to businesses that generate export sales and need additional working capital to support these sales.

• Maximum Loan Amount: $5 million
• Maximum SBA Guarantee: 90%
• Interest Rate: Negotiated between lender and borrower, no SBA maximum
• Revolving Lines of Credit: Terms up to 36 months
• Forms: SBA Form 1919
• Collateral: Export-related inventory and foreign accounts receivable generally provide adequate coverage
• Credit Decision: By SBA or delegated lenders can process, close, service, and liquidate without SBA review

International Trade Loans

The 7(a) International Trade loan program guarantees term loans to improve the competitive position of small businesses in international trade. These loans can be used for:

• Existing exporters developing new export markets
• Businesses adversely affected by import competition
• Improving facilities/equipment to produce goods/services for international trade
• Working capital for export transactions

CAPLines are revolving lines of credit that provide short-term working capital to help small businesses meet their cyclical or seasonal cash flow needs. 

There are four types of CAPLines: 

• Seasonal Line 
• Contract Line
• Builders Line
• Working Capital Line. 

Repayment of the SBA 7(a) Loan

The 7(a) loan repayment terms are agreed upon between the lender and borrower. The lender provides a repayment schedule specifying:

• Payment amount and frequency
• Interest rate

Lenders must pay the SBA both an upfront guaranty fee and an ongoing annual service fee, but they can pass these costs on to the borrower. The SBA publishes the amount of these fees each year. Lenders and agents are limited in the fees they can directly charge the borrower.

Percentage of Guaranty

The SBA charges a guaranty fee to the lender for each 7(a) loan. The lender may pass this fee on to you as part of the closing costs. The guaranty fee varies depending on the loan amount, the guarantee percentage, and the repayment term.

• Up to 85% guaranty for loans of $150,000 or less.
• Up to 75% guaranty for loans above $150,000.
• 50% guaranty for SBA Express loans.
• 90% guaranty for Export Express, Export Working Capital Program (EWCP), and International Trade loans.

Interest rates

The borrower and lender negotiate interest rates for 7(a) loans. Still, they are subject to maximums set by the SBA. These maximums are tied to the prime rate or an optional peg rate. The interest rates can be fixed or variable. SBA publishes the maximum fixed interest rates. The maximum variable interest rates are based on the loan amount, as follows:

Prepayment Penalty

For loans with maturities of 15 years or longer, prepayment penalties apply under the following conditions:

• The borrower voluntarily prepays 25% or more of the outstanding loan balance
• The prepayment occurs within the first three years after the date of initial loan disbursement

The prepayment fees are calculated as a percentage of the prepayment amount as follows:

• 5% fee if prepayment is made in year 1 after disbursement
• 3% fee if prepayment is made in year 2 after disbursement
• 1% fee if prepayment is made in year 3 after disbursement

No prepayment penalties apply after the first 3 years from initial disbursement.

Tips for Efficient Repayment of SBA 7(a) Loan:

• Make timely, full payments
• Track loan balance and interest
• Budget for payments
• Minimize expenses, save money
• Seek additional income/financing if needed
• Communicate with a lender about any changes

Focus on understanding the lender’s repayment terms, budgeting properly, and making timely payments. Ask the lender for clarification as needed.

Writing a Business Plan for the SBA 7(a) Loan

Your business plan makes the case for your company’s viability and your ability to repay borrowed funds. Follow these guidelines to write a plan that secures financing:

• Use the SBA’s outline. The SBA’s template covers all required sections including the company overview, market analysis, organization, operations, and detailed financials.
• Be concise and direct. Use clear language, bullet points, and headings to concisely convey your business model and opportunities. Avoid jargon and keep the plan under 50 pages.
• Provide accurate projections. Thoroughly research your industry and create realistic forecasts for sales, expenses, and profits. Provide historical data to support your projections.
• Demonstrate expertise. Highlight your management team’s experience. Provide credentials and track records that prove you can execute your business plan.
• Address risks honestly. Identify potential threats along with plans to mitigate them. This shows you have done careful risk assessment.
• Outline milestones. Define goals and performance metrics to track progress. This enables you to monitor success and pivot if needed.
• Use visuals strategically. Charts, graphs, and tables help summarize data and highlight trends. They make your plan more readable.

With a well-structured, realistic, and persuasive plan, you can convey your business’s full potential and ability to repay borrowed capital. This significantly improves your chances of SBA loan approval.

Sample SBA 7(a) Loan Proposal

To give you an idea of what a 7(a) loan proposal looks like, here is a sample outline of a business plan for a fictional company called ABC Bakery. This is not a complete or perfect example, but rather a simplified and illustrative one.

ABC Bakery SBA 7(a) Loan Business Plan

Executive Summary

• Summary of business goals, target market, competitive analysis, financial projections, and loan amount requested
• Highlight key points on why the business deserves funding

Company Description

• Legal business name, incorporation status, EIN, address, website
• Founding date, key personnel, their experience and qualifications
• Company vision, values, objectives, and long-term goals

Products and Services

• Details on types of baked goods offered
• Ingredients sourcing, production process, quality control procedures
• Packaging, pricing, inventory management
• Order fulfillment process and delivery options

Market Analysis

• Overview of bakery and cafe industry trends
• Demographic details on target customers
• Competitor products, pricing, quality, brand recognition
• Relevant regulations and opportunities for growth

Marketing Plan

• Pricing strategy aligned with positioning
• Planned promotions, partnerships, social media, SEO
• Distribution channels such as retail, wholesale, online
• Key metrics to measure performance

Operations Plan

• Leadership organizational chart
• Key roles and responsibilities
• Location requirements, equipment, suppliers
• Policies for health and safety, sustainability

Financial Plan

• Past financials and 5-year monthly projections
• Assumptions behind the projections
• repayment terms based on projections

Appendix (additional supporting documents)

• Resumes of key personnel
• Letters of reference or recommendation
• Contracts or agreements
• Licenses or permits
• Patents or trademarks
• Market research or surveys
• Product samples or brochures
• Financial statements or tax returns

OGSCapital: Your Partner in Crafting Effective SBA 7(a) Business Plans

Creating a strong SBA 7(a) business plan is challenging, but it is also critical for loan approval. At OGSCapital, our SBA business plan consultants specialize in crafting captivating narratives that resonate with lenders. With industry insight across sectors, we forge personalized SBA 7(a) loan business plans that spotlight your business’s essence and potential. 

With meticulous market research, precise financial projections, and polished presentation, our business plan writers prepare plans to set you apart. Whether a startup or established, team up with us at OGSCapital for a competitive edge that ensures your SBA loan application shines. All tables in PDF

Frequently Asked Questions

Q. Do SBA loans require a business plan?

Yes, SBA loans require a business plan. A business plan is a crucial piece of any SBA loan application. It’s what lenders will look at most closely when approving a loan, so it should be organized, well planned and persuasive.

Q. How do I write a business plan for SBA?

You can write a business plan for SBA by following the business plan guide provided by the U.S. Small Business Administration. They offer a business plan template and examples that you can use to create your own plan. Alternatively, you can refer to our financial advisor business plan .

Q. What is a SBA plan?

A SBA plan is a business plan that follows the specific formatting and requirements for SBA loan approval. The SBA provides detailed instructions on what to include in each section of your plan.

Q. What are the parts of a business plan for SBA?

Depending on your choice, you can write a traditional or a lean startup plan for SBA. A traditional plan is more detailed and has nine sections, such as executive summary, market analysis, and financial projections. A lean startup plan is more concise and has four sections, such as value proposition, problem and solution, and target market.

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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Key takeaways

• SBA 7(a) loans are the most common type of loan issued by the Small Business Administration
• You can get several types of SBA 7(a) loans, depending on your needs, including a 7(a) Small, Express, Export Express or CAPlines loan
• You can use a 7(a) loan for a variety of purposes, including working capital, buying equipment or real estate or refinancing debt

SBA loans are small business loans provided by private lenders and backed by the U.S. Small Business Administration. These loans guarantee that the government will pay back a portion of the loan if you can’t repay it.

Because of SBA loans’ competitive interest rates and repayment terms, many small businesses vie for these loans. As of March 2024, the SBA has approved over 30,500 SBA loans worth more than $12.96 billion, according to the SBA weekly lending report .

The most common loan the Small Business Administration grants is the 7(a) loan. You can apply for several types of 7(a) loans that match your business’s funding needs. Compare the different 7(a) loans, interest rates and fees and eligibility requirements to find which SBA 7(a) loan suits you best.

What is an SBA 7(a) loan?

An SBA 7(a) loan is a small business loan issued as part of the Small Business Administration’s 7(a) Loan Program. It offers seven loan options that you can apply for based on your business’s purpose for funding. For example, you might go for the Export Express loan if you’re looking to start an exporting business. Or you might choose the Builders CAPLine if you’re financing a construction project.

The 7(a) Loan Program is the most common SBA loan available since it can be used for a number of different purposes. It offers a maximum lending amount of $5 million. SBA 7(a) loans can be used for short- and long-term working capital, refinancing existing business debts, purchasing new machinery and equipment, acquiring supplies or other purposes to improve business operations.

Types of SBA loans

Sba 7(a) loan terms.

The standard SBA 7(a) loans guarantee up to 75 percent of the loan amount. The lender may also require collateral to guarantee the rest of the loan, using your business’s current assets or the assets being purchased or improved by the loan.

The loan is considered fully secured when the assets used equal the amount borrowed. Lenders and borrowers are free to negotiate loan terms and interest rates, but the lender cannot exceed the maximum interest rate set by the SBA.

For other SBA 7(a) loans like the SBA 7(a) Small loan or Express loan, you may not need collateral for loans of $50,000 or less. Loans above $50,000 typically will use the lender’s existing collateral policies to determine how much collateral you need.

SBA 7(a) loans must be used for one or more of these purposes:

• Real estate
• Working capital
• Refinancing current debt
• Buying equipment, furniture or supplies
• Change in ownership

SBA 7(a) loan requirements

SBA 7(a) loans come with a catch: you must meet the SBA’s strict set of requirements to be eligible for the 7(a) loan with all of its favorable rates and terms.

According to the SBA, businesses that apply for SBA 7(a) loans must meet the following criteria:

• Operate for profit
• Meet the SBA definition of a small business
• Do business in the United States or its territories
• Demonstrate a need for a loan
• Demonstrate that the funds will support a sound business
• Up to date on any existing U.S. government debt obligations
• Be creditworthy and reasonably able to repay the loan
• Must attempt to get conventional business loans and financing before applying

SBA lenders also set their own criteria for minimum time in business, credit score and annual revenue. These requirements tend to be strict, such as requiring two years in business. Lenders typically require strong personal credit, like 670 or above, though some lenders may accept fair credit, such as a personal credit score of 630.

SBA 7(a) loan rates

SBA lenders will offer an interest rate based on your creditworthiness and financial profile. But lenders cannot exceed these maximum interest rates set by the SBA.

Fixed-rate loans

SBA loan rates are current as of March 2024, calculated with the current prime rate of 8.50%.

Variable-rate loans

Sba (7a) loan fees.

When getting an SBA 7(a) loan, you’ll need to pay a fee for receiving the SBA guarantee for the loan, called a guarantee fee . For fiscal year 2024, the guarantee fees are:

Loans with 12-month terms or less

Loans with terms over 12 months.

As an exception, Express loans given to veterans and their spouses won’t be charged a guarantee fee.

How to apply for an SBA 7(a) loan

To apply for an SBA 7(a) loan, you will need to work with a lender approved by the SBA. Then, be prepared to submit a long list of financial documentation to show that you can repay the loan. You’ll go through multiple steps to apply for the loan, including:

1. Find a lender

Many financial institutions offer SBA 7(a) loans, though you’ll usually find them with traditional banks and credit unions. The SBA offers an online tool that helps match businesses with lenders. Finding the right lender can help you apply and, ultimately, give you the best odds of getting approved for a loan.

Some lenders also participate in the SBA Preferred Lender Program, which certifies that the lender can process SBA loans efficiently. Preferred lenders may be able to bypass getting direct SBA approval for some loans, significantly speeding up the loan approval process. Lenders in the Preferred Lending program include Chase , Bank of America and Huntington National Bank .

2. Submit an application

Once you have selected your lender, you will need to gather the necessary documents and fill out the proper 7(a) loan application to be considered for approval.

There are several documents that you may be required to submit in order to be approved for an SBA 7(a) loan. While your lender will help you submit the proper forms, you may need the following:

• SBA Form 1920
• SBA Form 1919 (Borrower Information Form) SBA Forms 912 and 413 (Personal background and financial statement)
• Business financial statements, like balance sheets and profit and loss statements
• Projected financial statements
• Business certificate or license
• Prior loan applications
• Income tax returns
• Information on each business owner
• Business overview and history
• Business lease

3. Await approval

Once you submit your SBA 7(a) loan application, you will have to wait for the SBA to review it and make a decision.

SBA Preferred Lenders may approve loans faster than non-preferred lenders. The SBA states that the turnaround time for its portion of the approval is five to 10 business days, but any missing documentation, application errors or other lender requirements could delay the process. You should be willing to wait anywhere from 30 to 90 days since this is the average processing time for SBA loans.

Alternatives to SBA 7(a) loans

If you don’t qualify or you were denied an SBA loan , you might need to consider these financing alternatives:

• SBA microloans : SBA microloans offer small amounts of funding up to $50,000. They’re offered through nonprofit or community SBA microlenders that often aim to serve disadvantaged communities. They tend to have lenient requirements to apply, such as having low or no credit requirements.
• Online lenders : Online lenders offer faster funding than traditional lenders and the SBA. Loan amounts vary, but online lenders typically have less strict requirements. For example, they may accept startups or borrowers with personal credit scores of 600 or less.
• Business credit cards : Business credit cards may be easier to qualify for than SBA loans, though credit limits may be lower than SBA loan amounts. Credit card companies typically don’t require much documentation to apply. Many credit cards have rewards like cash back or points that you can redeem for travel or other purchases. You can also avoid accruing interest if you pay the balance in full each month.
• Business lines of credit: A business line of credit offers a credit limit — or maximum borrowing amount — that you can borrow against whenever you need it. The credit limit replenishes as you repay the loan, allowing you to reuse it. Plus, you only pay interest on the amounts you borrow.
• Equipment loans: Equipment loans offer a lump-sum payment with set repayment terms backed by the equipment as collateral. Many lenders set lenient requirements for these loans since they’re secured by the equipment.
• Grants : Business grants are an ideal way to finance your business since they don’t require you to repay the funds. You can even find grants geared toward specific groups, such as minorities . But you have to meet the requirements for the grant and compete with the many other businesses applying for it.
• Bad credit business loans: Some lenders offer bad credit business loans for borrowers with poor credit, such as a score of 550 or 625. Also, certain loans like merchant cash advances cater to high-risk borrowers with high approval rates but with added fees.
• Crowdfunding: Crowdfunding offers a way to raise funds from individuals willing to invest in your business. With some crowdfunding platforms like Kiva, the funds act as a business loan that you will repay with or without interest.

Bottom line

The SBA 7(a) loan program is the U.S. Small Business Administration’s most popular SBA loan because it offers several loans that can be used for a variety of purposes. The SBA also sets maximum interest rates and offers long repayment terms, making 7(a) loans highly attractive to small businesses. But you will need to meet the strict requirements set by both the SBA and the lender in order to be eligible.

Frequently asked questions

How hard is it to qualify for an sba 7(a) loan, do you need collateral for an sba 7(a) loan, do you need a business plan for an sba 7(a) loan.

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SBA loan guide: Everything you need to know about SBA loans

SBA loan statistics: Top lenders

SBA Express loan: Requirements and application

SBA 7(a) vs. 504 loans

SBA Loan Checklist: Requirements and Documentation Needed for an SBA 7a Loan

Are you a small business owner seeking financing to grow your business? Look no further! The SBA 7(a) loan might be the perfect solution for you. This comprehensive guide will help you navigate the complex world of SBA 7(a) loans, understand eligibility requirements, and streamline the application process. Buckle up, and let’s dive into the world of SBA 7(a) loans!

Key Takeaways

• Understand SBA 7(a) loan requirements and eligibility criteria.
• Prepare documents including financial statements, tax returns, collateral documentation & personal/business information for a successful application process.
• Explore alternative financing options such as business term loans, lines of credit or invoice financing if ineligible for an SBA 7(a) loan.

Understanding SBA 7(a) Loan Requirements

The SBA 7(a) loan is a popular financing option for small businesses, offering favorable rates and flexible repayment terms. To qualify for an SBA 7(a) loan, businesses must meet certain eligibility requirements, including business size, industry, and financial health criteria. The maximum loan amount is determined by these factors, with a significant amount available for qualified businesses seeking sba loans.

We will now delve into these requirements in more detail.

Business Size and Industry Standards

You must meet the SBA’s size standards to be eligible for an SBA 7(a) loan. This applies to all businesses that wish to obtain such a loan. For manufacturing and mining industries, this means having fewer than 500 employees, while non-manufacturing industries must have an average annual receipt of under $7.5 million.

Business assets significantly influence the determination of eligibility for an SBA 7(a) loan. Possessing a detailed business plan that effectively showcases your business’s potential and your dedication to its success is vital.

A good personal credit score is also an important factor for SBA 7(a) loan approval.

Financial Health Factors

In addition to meeting size and industry standards, your business must demonstrate strong financial health to qualify for an SBA 7(a) loan. Creditworthiness, cash flow, and debt service coverage ratio are all essential when evaluating a business. These considerations help to ensure the financial stability of an organization, which is why SBA guarantees play a crucial role in the approval process and meeting the sba loan requirements.

A minimum credit score of 640 is generally required for obtaining financial assistance through an SBA 7(a) loan. Cash flow is another determinant, as it is evaluated by lenders to determine if your business can comfortably cover loan payments and other financial obligations.

The debt service coverage ratio is a key metric utilized by lenders to judge a business’s capacity to settle its debts. It uses the cash flow of the company to calculate finances and determine if it can handle the payments for those debts.

Additional Eligibility Criteria

Apart from size, industry, and financial health, there are additional eligibility criteria that your business must meet to qualify for an SBA 7(a) loan. These include:

• Personal investment
• Sound business purpose
• Credit history
• Personal guarantee
• No delinquencies

A good credit score increases the probability of approval for an SBA 7(a) loan. Having sufficient cash flow also significantly impacts the approval process.

Furthermore, your business must be in operation for a minimum of two years, provide a 10% down payment for specific purposes, and supply collateral for loan requests exceeding $25,000. Lastly, a personal guarantee is required, signifying that the borrower is personally liable for repaying the loan if the business defaults.

The SBA 7(a) Loan Application Process

Having grasped the eligibility requirements for an SBA 7(a) loan, let’s move on to the application process. The first step is to find a certified SBA lender in your area.

The SBA 7(a) loan application comprises three primary components: the 7(a) LGPC Submission Cover Sheet, SBA Form(s) 1919, and SBA Form 1920, which are submitted to the loan guaranty processing center. The checklist for the SBA 7(a) loan application includes several documents, such as a Borrower Information Form, Personal Background and Financial Statement, Business Financial Statement, Business Certificate/License, Loan Application History, Income Tax Returns, Resumes, Business Overview and History, and a Business Lease.

As a borrower, your responsibility is to provide information for Form 1919. Depending on the intended use of the funds and any fees paid to a loan package, broker or agent, other SBA documents may be necessary. Before signing any loan documents, make sure to thoroughly review all applicable requirements.

Keep in mind that the processing time for an SBA loan application could take up to several months. However, having organized documents can expedite the application process.

Finding an SBA-Approved Lender

To begin your journey towards securing an SBA 7(a) loan, you need to find a participating SBA lender. Some SBA-approved lenders include:

• Live Oak Bank
• Huntington Bank
• Wells Fargo
• Newtek Small Business Finance
• Celtic Bank

Working with an experienced lender can provide numerous advantages, such as access to more competitive rates, improved terms, and a more efficient loan process. Additionally, seasoned lenders are likely to have a greater understanding of the complexities of the SBA loan process and can offer valuable advice and recommendations.

Preparing Your Loan Application

As you prepare your SBA 7(a) loan application, you must collect all the required documents, such as financial statements, tax returns, and collateral documentation. A comprehensive business plan is crucial for demonstrating your business’s potential and commitment to success.

Organizing your documents and ensuring their accuracy can help expedite the application process and increase your chances of approval. Additionally, providing accurate and complete documentation will help lenders to better understand your business’s financial standing and repayment capacity.

Essential Documents for Your SBA 7(a) Loan Application

In order to secure a successful SBA 7(a) loan application, providing all the required documentation is imperative. This includes personal and business information, financial statements and tax returns, and collateral documentation.

We will now examine each of these document categories in greater detail.

Personal and Business Information

The personal and business information required for an SBA 7(a) loan application includes details about your legal structure, ownership, and tax identification numbers. It’s important to provide accurate information, as discrepancies can delay the approval process or even lead to rejection.

Ensuring that all the necessary documents are in order will help streamline the process and increase your chances of obtaining the financial assistance you need to grow your business.

Financial Statements and Tax Returns

Submitting precise financial statements and personal tax returns is key to the success of your SBA 7(a) loan application. These documents offer the lender insight into your business’s financial standing and repayment capacity.

For your application, you’ll need to provide the following documents:

• Personal financial statement
• Current income statements
• Balance sheets
• Filed tax returns
• YTD profit and loss statements

Accurate and complete documentation will help ensure a smooth application process and keep your business moving forward.

Collateral Documentation

Collateral is often required for securing an SBA 7(a) loan, and providing the necessary documentation is essential. Collateral documentation may include:

• Personal residential and/or investment real estate
• Balance sheet
• Year-to-date profit and loss statement
• SBA Form 1919 (Borrower Information Form)
• SBA Form 413 (Personal Finance Statement)
• Agreement to purchase the business

High-value assets such as equipment or real estate can be used to secure your loan, ensuring the lender has a means of recovering their investment in the event of default. This allows you to access loan proceeds with confidence.

Tips for Streamlining the SBA 7(a) Loan Application Process

Navigating the SBA 7(a) loan application process can be challenging, but there are several strategies you can employ to streamline the process and increase your likelihood of approval. These strategies include working with a loan specialist, ensuring accurate and complete documentation, and maintaining open communication with your lender.

By following these tips, you can help ensure a smoother application process and a higher chance of securing the financing your business needs.

Work with a Loan Specialist

Partnering with an SBA loan specialist can be highly beneficial in navigating the complex application process and understanding the requirements. An SBA loan specialist can advise you on the most suitable loan option for your business and help you gather the necessary documents.

Their expertise and guidance can help you avoid potential pitfalls and improve your chances of securing the financing you need to grow your business.

Ensure Accurate and Complete Documentation

Submitting accurate and complete documentation for your SBA 7(a) loan application is of utmost importance. Errors or missing information can lead to delays in processing your application or even rejection.

Organizing your documents and ensuring their accuracy can help expedite the application process and increase your chances of approval. By presenting a clear and thorough picture of your business’s financial standing, lenders can better evaluate your repayment capacity and the associated risks with the loan.

Maintain Open Communication with Your Lender

Throughout the application process, it’s vital to maintain open and clear communication with your lender. Here are some essential steps to ensure effective communication:

• Promptly respond to emails and phone calls from your lender.
• Provide all requested documents in a timely manner.
• Ask questions if clarification is needed.

By following these steps, you can maintain a strong line of communication with your lender.

Failure to maintain open communication may result in delays, decreased trust, and potentially even rejection of your loan application. By fostering a strong relationship with your lender, you can improve your chances of securing the financing your business needs.

Alternative Financing Options for Ineligible Businesses

If your business doesn’t meet the eligibility requirements for an SBA 7(a) loan, don’t worry! There are alternative financing options available, such as business term loans, lines of credit, and invoice financing. Each option has its own set of advantages and disadvantages, and it’s important to carefully evaluate which one best suits your business’s needs.

We will now delve deeper into these alternatives.

Business Term Loans

Business term loans are a popular financing option for small businesses that provide a lump sum of funding to be repaid over a set period, usually ranging from one to five years. These loans can be used for a variety of business objectives, such as acquiring equipment, expanding operations, or refinancing existing debt. One such loan program caters specifically to the needs of small businesses, ensuring they have access to the funds they require.

Business term loans provide access to capital for stimulating growth and expanding operations, however, it is crucial to meticulously evaluate the repayment terms and interest rates before opting for this financing solution.

Lines of Credit

A business line of credit offers the following benefits:

• Revolving credit facility
• Borrow up to a predetermined limit
• Interest payable only on the amount borrowed
• Enhanced cash flow for businesses that do not meet eligibility criteria
• Flexible repayment options
• Access to funds
• Opportunity to establish business credit

This financing option, providing working capital, can be particularly useful for businesses with fluctuating cash flow needs or those looking to cover short-term expenses.

Invoice Financing

Invoice financing is a borrowing option for businesses that need to cover expenses while awaiting customer payments. It involves borrowing against outstanding invoices to bridge the gap between payment and receipt.

Invoice financing can provide ineligible businesses with:

• Improved cash flow
• Faster access to funds
• Potential for business growth
• Optional credit control services

Although this financing alternative can aid businesses grappling with cash flow issues, it is crucial to meticulously weigh the fees and terms linked with invoice financing before deciding if it aligns with your business needs.

In conclusion, the SBA 7(a) loan is a powerful financing option for eligible small businesses seeking to grow and expand. By understanding the eligibility requirements, properly preparing your loan application, and maintaining open communication with your lender, you can improve your chances of securing this valuable financing. However, if you find that your business doesn’t meet the eligibility criteria, there are alternative financing options available that may better suit your needs. Remember, the key to success is perseverance and dedication – don’t let financing obstacles hold you back from achieving your business dreams!

Frequently Asked Questions

What documents are required for sba 7a loan.

To apply for an SBA 7a loan, you will need to provide Personal Tax Returns, an Image of Driver's License or Government-issued ID, a Personal Financial Statement or SBA Form 413, Agreement to purchase the business, Letter of Intent to buy the business, Business tax returns from the past three years, Outstanding business debt, Long-term business contracts, Documentation of business assets, and a Business lease agreement.

How hard is it to get approved for SBA 7a loan?

Getting approved for an SBA 7(a) loan can be difficult due to the strict requirements such as a good credit score of 690 or higher, annual revenue, and at least two years in business. Lender criteria may also vary.

Do you need collateral for SBA 7a?

Collateral may be required for loans of $350,000 or more, and if you default, the lender can seize it. SBA does not require collateral for loans of $50,000 or less, except for International Trade loans.

How can I find an SBA-approved lender?

To find an SBA-approved lender, you can use the online directory, your local district office, or a loan specialist.

What are some alternative financing options for businesses that do not qualify for an SBA 7(a) loan?

Alternative financing options for businesses that do not qualify for an SBA 7(a) loan include business term loans, lines of credit, and invoice financing.

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Home > Finance > Loans

A Guide to SBA 7(a) Loans

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Thanks to their low interest rates, high loan ceiling, and extended repayment terms, SBA 7(a) loans are the most popular and straightforward U.S. Small Business Administration payouts. Plus, they can be used for a variety of purposes.

We understand that financing is complicated, and navigating through a handful of funding options may feel like finding a needle in a haystack. Fortunately, Business.org has your back. Here’s some further insight to see if the SBA 7(a) loan guaranty program is the right financing option for you.

Lendio partners with over 75 lenders, which improves your odds and efficiency to get the funding you need.

Qualifications:

$50k in revenue

6 mos. in business

560 credit score

SBA 7(a) loans and business resources

Sba 7(a) overview, sba 7(a) loan rates and terms, sba 7(a) loan requirements, sba 7(a) loan down payment.

• SBA 7(a) vs. 504

SBA 7(a) lenders

• SBA 7(a) calculator

The SBA, which stands for the U.S. Small Business Administration, is a federal agency that gives budding entrepreneurs the same access to working capital as well-established organizations.

The most common misconception about the SBA is that the agency actually lends money to businesses. On the contrary, the SBA uses federal money to guarantee up to 85% of the loan amount provided by banks and other loan providers. This means less risk for lenders. And less risk for lenders means more small businesses will be considered for traditional lower-rate financing.

SBA loan benefits don’t stop there. As we mentioned above, SBA 7(a) loans are designed for a wide variety of uses:

• Establishing working capital
• Refinancing debts
• Purchasing equipment
• Buying land
• Expanding existing businesses

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The SBA 7(a) loan terms are some of the most ideal on the market, offering flexibility, longer terms, and lower down payments compared to other small-business loan options . Participating lenders set their interest rates based on the loan term and size, daily prime rate (a base rate on loans determined by banks), and a fixed base rate known as the spread (the average difference between interest rates for borrowers and depositors). The daily prime rate goes up or down depending on how the US economy is doing.

The current maximum interest rate ranges from 5.5% to 8%. This number is determined by the size of the loan. If you have excellent credit, you may be able to negotiate a lower interest rate. Depending on which lender you’re partnering with, you may also be charged an origination fee or a loan packaging fee. Terms are up to 7 years for working capital, 10 years for equipment, and 25 years for real estate.

Each loan is unique, so it’s difficult to say how quickly you’ll receive funding. SBA Express loans and SBA 7(a) Advantage loans, two variations of the standard SBA 7(a) loan, are available to speed up the approval process.

SBA 7(a) loans aren’t the easiest loan program to qualify for. They require a credit score of at least 650 and a gross annual revenue of $100,000 or more. You’ll also need to be in business for at least two years. Businesses with recent bankruptcies, foreclosures, or tax liens will most likely be denied funding. To speed up the approval process, round up the following documents:

• 3 years of business tax returns
• 3 years of personal tax returns
• Copy of original business license or certificate
• Records of loan application history
• Business lease
• Resumes for each principal
• YTD profit and loss statement
• YTD balance sheet
• Debt schedule

When it comes to qualifying for a business loan, there’s no one-size-fits-all answer. Most lenders take a number of factors into consideration. If you’d like to learn more about how to get approved for a business loan, we encourage you to explore the most important business loan requirements .

When applying for an SBA 7(a) loan, be prepared to submit a 10% down payment before receiving the funds. For loans of $350,000 or higher, you may also have to secure the loan with some collateral. If you don’t have enough business collateral, offering personal collateral will help you qualify.

SBA 7a loan vs 504

Of all the types of SBA business loans , the 7(a) and 504 are among the most popular. Both offer a slew of benefits for small-business owners, but they have slight differences.

Created for small businesses looking to buy or build commercial real estate, CDC/504 loans are made up of two different loans. One comes from a bank that funds about 50% of your financing, and the other comes from a local community development corporation (CDC) who funds about 40%. The leftover 10% will come from the borrower.

When applying for a CDC/SBA 504 loan, your business must monopolize at least 51% of an existing commercial building or 60% of a new one. Similar to SBA 7(a) loans, CDC/SBA 504 loans require a credit score of 680 and have a maximum loan amount of $5,000,000.

The CDC determines the rates, fees, and terms of the loan. For 10-year loans, you’ll have a 2.231% fixed interest rate. If you opt for a 20-year loan, be prepared to pay 2.364% fixed interest.

Data effective 11/21/20. At publishing time, amounts, rates, and requirements are current but are subject to change. Offers may not be available in all areas.

Lendio is an online marketplace that helps business owners see all of their loan options to help them find the best rate. Its SBA loan amounts range from $50,000 to $5,000,000 with 10- to 30-year loan terms. If you’re looking for fast funding, look elsewhere. Lendio takes 30 to 90 days to fund the loan.

To help navigate your SBA loan options, take advantage of Lendio's personal loan manager.

SmartBiz caught our eye thanks to its low rates, which range from 4.75% to 7%. Plus, its platform offers a fast, less cumbersome way to apply for an SBA loan. It does, however, require more documentation than other online small-business lenders.

If you have shaky finances, you may need to seek funding elsewhere. The typical SmartBiz borrower has at least two years in business and an annual income of at least $100,000.

Wells Fargo

As a giant financial institution, Wells Fargo has helped countless small businesses grow. Its terms are up to 7 years for working capital, 10 years for equipment, and 25 years for real estate.

As a bonus, Wells Fargo’s customer service ratings are more favorable than most corporate giants. If you don’t mind working with large corporate entities and have a solid credit history, Wells Fargo is worth considering.

Bank of America

An SBA loan from Bank of America is one of the most sought-after loans out there. Ranging from $350,000 to $3.5 million, the SBA 7(a) loan from Bank of America is a great option for small-business owners looking for flexible, low-cost funding to start or expand their businesses. It also matches Wells Fargo’s terms: 7 years for working capital, 10 years for equipment, and 25 years for real estate.

It’s worth noting that the typical time to fund is roughly three weeks, which beats some of the other lenders on our list.

JPMorgan Chase Bank

JPMorgan Chase Bank consistently stays ahead of the pack thanks to the sheer volume of SBA loans it processes and funds. Chase offers three different SBA loan programs: the 7(a), the CDC/504, and the SBA Express. Although Chase doesn’t have a hard-and-fast rule on what interest rate it charges you, rest assured that the SBA sets a cap on how much it can add on to the national prime rate. In a rough estimate, your Chase 7(a) loan won’t have an interest rate of more than 10%.

Searching for a more thorough list of SBA lenders ? You can locate additional local SBA lenders through sba.gov.

SBA 7(a) costs

Your SBA loan payment is determined by loan amount, interest rate, and terms. You’ll also have to pay a guarantee fee, which is usually a percentage of the loan based on how much of the loan is guaranteed and the length of the repayment term. How much you borrow is influenced by qualifying components, including your personal credit score, financial projections, what you can afford, and how the loan will be used.

Avoid surprise costs by discussing additional fees with the lender, such as application fees and origination fees. To possibly reduce loan costs, ask your lender about discounts and any potential prepayment penalties.

Estimate your loan payments through our free SBA business loan calculator

The takeaway

SBA-backed loans, particularly the 7(a), are a hot commodity in the loan marketplace thanks to their lower rates. Although they may be considered a last resort for business owners who can’t get approved for traditional funding, they can help you start, maintain, or expand your business.

Think a 7(a) loan sounds right for you? Learn how to get an SBA loan for your business.

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

1. Congressional Research Service, “ Small Business Administration 7(a) Loan Guaranty Program .” Accessed December 6, 2022.

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How To Write SBA Business Plan With Free Template

A business plan is a vital document for any entrepreneur who wants to start or grow a small business. It outlines your vision, goals, strategies, market analysis, financial projections, and more. It helps you to organize your thoughts, identify potential challenges and opportunities, and communicate your vision to others. A well-written business plan can also help you secure funding from the Small Business Administration (SBA), which offers loans and grants to eligible small businesses. The SBA has specific requirements and standards for business plans, and you need to follow them carefully if you want to increase your chances of getting approved.

In this blog post, we will guide you through the steps of writing a SBA business plan with an example. We will cover the following topics:

SBA – what is it? & What is the purpose of the SBA business plan?

What are the main components of a SBA business plan?

How to write each section of a sba business plan with an example.

How to format and present your SBA business plan?

SBA Business Plan Template

Creating a business plan that meets the standards of the Small Business Administration (SBA) can be challenging, but not with our SBA Business Plan Template. This template is based on the best practices and guidelines of the SBA, and it will walk you through the key sections of a business plan, such as the executive summary, market analysis, competitive advantage, financial projections, and more. You can easily adapt the template to your specific industry, niche, and goals, and save yourself time and hassle in the process. Our SBA Business Plan Template is not just a document – it’s a tool that will help you secure funding, attract customers, and grow your business successfully. We have years of experience in helping small businesses achieve their dreams, and we are confident that our template will help you too.

SBA - what is it? and what is the purpose of the SBA business plan?

What is sba.

SBA stands for  Small Business Administration . It is an independent agency of the United States government that provides support to entrepreneurs and small businesses. The SBA is a valuable resource for small businesses. If you are starting or running a small business, the SBA can help you get the financing, counseling, and training you need to succeed.

The SBA offers a variety of programs and services, including:

Loans: The SBA guarantees loans made by banks and other lenders to small businesses. This can help small businesses get the financing they need to start or grow their business. Surety Bonds: The SBA provides surety bonds to small businesses that need them to bid on government contracts. This can help small businesses compete for government contracts that they might not otherwise be able to get. Consulting: The SBA offers counseling and training to small businesses on a variety of topics, such as business planning , marketing, and financial management. Government Contracting: The SBA helps small businesses get government contracts. The SBA has a set-aside program that reserves a certain percentage of government contracts for small businesses. Advocacy: The SBA advocates on behalf of small businesses in Washington, D.C. The SBA works to ensure that small businesses have a voice in the federal government.

Here are some of the benefits of SBA loans:

Low interest rates:   SBA loans  typically have lower interest rates than conventional loans. This can save you money on your monthly payments. Longer repayment terms: SBA loans typically have longer repayment terms than conventional loans. This can give you more time to pay back your loan. Guarantee: The SBA guarantees 75% of SBA loans. This means that the lender is only at risk for 25% of the loan amount. This makes it easier for small businesses to get approved for loans.

Learn how to write a  business plan for loan in just 7 simple steps

Purpose of sba business plan.

The purpose of an SBA business plan is to provide a roadmap for your business. It should outline your goals, strategies, and financial projections. The SBA business plan is a requirement for many SBA loans, but it can also be a valuable tool for any small business owner. If you are thinking about starting or running a small business, an SBA business plan is a valuable tool. It can help you to secure funding, guide your business, attract investors, improve your management skills, and track your progress.

Here are some of the specific purposes of an SBA business plan:

• To secure funding:  The SBA business plan is a key document that lenders will review when considering your loan application. It will help them to understand your business and its potential for success.
• To guide your business:  The SBA business plan can help you to stay focused on your goals and make informed decisions about your business. It can also help you to identify potential problems and develop solutions.
• To attract investors:  If you are looking to attract investors, an SBA business plan can be a valuable tool. It will help you to communicate your vision for your business and convince investors  that your business is a good investment.
• To improve your management skills:  The process of writing an SBA business plan can help you to improve your management skills. It will force you to think critically about your business and develop a plan for its success.
• To track your progress:  The SBA business plan can be used to track your progress and make adjustments as needed. It can also help you to identify areas where your business is doing well and areas where it needs improvement.

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The main components of an SBA business plan are:

• Executive summary:  This is a brief overview of your business, including its products or services, target market, and competitive advantages.
• Company description:  This section provides more detailed information about your business, such as its history, legal structure, and management team.
• Products and services:  This section describes the products or services that your business offers.
• Market analysis:  This section analyzes your target market, including its size, growth potential, and competitive landscape.
• Marketing plan:  This section outlines your strategies for reaching and acquiring customers.
• Operations plan:  This section describes how your business will be run on a day-to-day basis.
• Management team:  This section introduces your management team and their qualifications.
• Financial projections:  This section provides estimates of your business’s revenue, expenses, and cash flow.
• Appendix:  This section includes supporting documents, such as financial statements, marketing materials, and product samples.

The SBA does not have a set format for business plans, so you can tailor your plan to the specific requirements of the lender you are applying to. However, the SBA does recommend that all business plans include the following elements:

• A clear and concise overview of your business
• A realistic assessment of your market and competition
• A well-defined marketing plan
• A sound financial plan
• A strong management team

If you are applying for an SBA loan , it is important to carefully prepare your business plan. The SBA will review your plan carefully to assess the viability of your business and your chances of success.

Here are some additional tips for writing an SBA business plan:

• Be clear and concise. The SBA reviewers are busy people, so they don’t have time to read through long, rambling business plans.
• Be realistic. Don’t make unrealistic projections about your revenue or growth.
• Be specific. Don’t just say that you’re going to “market your product.” Explain exactly how you’re going to do it.
• Be persuasive. The goal of your business plan is to convince the SBA to lend you money. So make sure your plan is well-written and persuasive.

Access our 14 free sample business plans now!

A business plan is a document that describes your business idea, goals, strategies, and operations. It helps you communicate your vision to potential investors, lenders, partners, and customers. It also helps you plan and manage your business effectively.

The U.S. Small Business Administration (SBA) provides a standard business plan template that you can use to write your own plan. The template consists of eight major sections that cover the essential aspects of your business. Here is a brief overview of each section and an example of how to write it.

• Exective Summary
• Company Description
• Market Analysis
• Organization and Management
• Product or Service Description
• Marketing and Sales
• Funding Request
• Financial Projections

1. Exective Summary

This section summarizes the main points of your business plan in one or two pages. It should capture the reader’s attention and interest, and highlight your unique value proposition, target market, competitive advantage, financial projections, and funding needs. You should write this section last, after completing the rest of your plan.

XYZ Inc. is a software company that develops and sells cloud-based solutions for small and medium-sized businesses (SMBs). Our products help SMBs manage their accounting, invoicing, payroll, inventory, and customer relationship management (CRM) processes more efficiently and securely.

We have a proven track record of delivering high-quality software solutions to over 1,000 customers across various industries. We have a strong team of experienced developers, marketers, and customer support specialists who are passionate about solving our customers’ problems and providing them with exceptional service.

We are seeking $500,000 in debt financing from the SBA to expand our product portfolio, increase our marketing efforts, and hire more staff. We expect to generate $2 million in revenue and $500,000 in net income in the first year of operation, and grow at an annual rate of 25% for the next five years.

2. Company Description

This section provides detailed information about your company’s history, mission, vision, values, goals, objectives, legal structure, ownership, location, and facilities. It should also describe the problems your business solves, the customers you serve, and the competitive advantages that make your business stand out.

XYZ Inc. was founded in 2019 by John Smith and Jane Doe, two software engineers who saw a gap in the market for affordable and easy-to-use cloud-based solutions for SMBs. They started developing their first product, XYZ Accounting, in their garage, and launched it in 2020 after securing their first customer.

Our mission is to empower SMBs with innovative and reliable software solutions that help them streamline their business processes and grow their revenue. Our vision is to become the leading provider of cloud-based solutions for SMBs in the U.S. and beyond. Our values are excellence, innovation, customer satisfaction, integrity, and teamwork.

We are a Delaware corporation with 10% ownership by John Smith, 10% ownership by Jane Doe, and 80% ownership by XYZ Holdings LLC, a holding company owned by John Smith and Jane Doe. We operate from our headquarters in San Francisco, California, where we have a 5,000 square foot office space that accommodates our development, marketing, and customer support teams. How to write each section of a SBA business plan with an example?

3. Market Analysis

This section analyzes the industry, market, and competition for your business. It should provide data and evidence to support your market opportunity, customer needs, demand, trends, growth potential, and competitive landscape. It should also explain how you plan to enter, position, and differentiate your business in the market.

The cloud-based software market for SMBs is expected to grow at a compound annual growth rate (CAGR) of 15% from 2020 to 2025, reaching $50 billion in revenue by 2025, according to a report by Market Research Inc. The main drivers of this growth are the increasing adoption of cloud computing, the need for cost-effective and scalable solutions, and the demand for remote work and collaboration tools.

Our target market is SMBs in the U.S. that have between 10 and 500 employees and operate in various industries such as retail, manufacturing, healthcare, education, and professional services. We estimate that there are over 5 million SMBs in the U.S. that fit this criteria, and that they spend an average of $10,000 per year on software solutions.

Our main competitors are ABC Inc., DEF Inc., and GHI Inc., which offer similar cloud-based solutions for SMBs. However, we have several competitive advantages that set us apart from them:

– We offer a more comprehensive and integrated suite of products that cover all the essential business functions of SMBs. – We offer a more affordable and flexible pricing model that allows SMBs to pay only for what they use and scale up or down as needed. – We offer a more user-friendly and intuitive interface that makes our products easy to learn and use. – We offer a more personalized and responsive customer service that provides 24/7 support and training.

We plan to enter the market by leveraging our existing customer base, referrals, testimonials, and online reviews. We also plan to position our business as a one-stop shop for SMBs that need cloud-based solutions to run their businesses efficiently and securely. We also plan to differentiate our business by offering superior quality, value, innovation, and customer satisfaction.

4. Organization and Management

This section describes the organizational structure, management team, roles and responsibilities, qualifications, and compensation of your business. It should also include any advisors, consultants, board members, or key employees that are involved in your business. It should demonstrate how your team has the skills, experience, and expertise to execute your business plan successfully.

XYZ Inc. has a simple and flat organizational structure that consists of three main departments: development, marketing, and customer support. Each department is led by a manager who reports directly to the CEO. The CEO is also the co-founder and majority owner of the business.

Our management team consists of:

– John Smith: CEO and co-founder. John has over 10 years of experience in software development and management. He is responsible for overseeing the overall strategy, vision, and direction of the business.

– Jane Doe: CTO and co-founder. Jane has over 10 years of experience in software engineering and design. She is responsible for leading the development team and ensuring the quality and functionality of our products.

– Mark Lee: Marketing manager. Mark has over 5 years of experience in digital marketing and sales. He is responsible for leading the marketing team and executing the marketing strategy and campaigns.

– Lisa Kim: Customer support manager. Lisa has over 5 years of experience in customer service and training. She is responsible for leading the customer support team and providing excellent service and support to our customers.

We also have a board of advisors that consists of:

– Bob Jones: A seasoned entrepreneur and investor who has founded and sold several successful software companies.

– Mary Smith: A former SBA loan officer who has extensive knowledge and experience in financing small businesses.

– Tom Lee: A professor of computer science at Stanford University who is an expert in cloud computing and artificial intelligence.

Our key employees consist of:

– 10 software developers who are skilled in various programming languages, frameworks, and tools.

– 5 marketing specialists who are proficient in various digital marketing channels, techniques, and platforms.

– 5 customer support representatives who are trained in various software products, features, and issues. We compensate our employees with competitive salaries, bonuses, stock options, and benefits such as health insurance, retirement plans, and paid leave.

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5. product or services description.

This section describes the products or services that your business offers, and how they benefit your customers. It should also explain the features, functions, quality, design, development, production, delivery, installation, maintenance, and support of your products or services. It should also address any intellectual property rights, patents, trademarks, or licenses that your business owns or needs.

XYZ Inc. offers a suite of cloud-based software solutions for SMBs that help them manage their accounting, invoicing, payroll, inventory, and CRM processes more efficiently and securely. Our products are:

– XYZ Accounting: A software solution that helps SMBs track their income and expenses, create and send invoices, manage their taxes, and generate financial reports. – XYZ Payroll: A software solution that helps SMBs calculate and pay their employees’ salaries, wages, taxes, and benefits. – XYZ Inventory: A software solution that helps SMBs monitor and control their inventory levels, costs, and movements. – XYZ CRM: A software solution that helps SMBs manage their customer relationships, interactions, sales pipeline, and loyalty programs.

Our products have the following benefits for our customers:

– They save time and money by automating and streamlining their business processes. – They improve accuracy and compliance by reducing errors and risks. – They enhance security and reliability by protecting their data and ensuring their availability. – They increase productivity and profitability by optimizing their performance and growth.

Our products have the following features and functions:

– They are cloud-based, which means they can be accessed from any device, anywhere, and anytime. – They are integrated, which means they can share data and communicate with each other seamlessly. – They are customizable, which means they can be tailored to fit the specific needs and preferences of each customer. – They are scalable, which means they can handle any volume of transactions and users without compromising speed or quality.

Our products have the following quality standards:

– They are developed using the latest technologies and best practices in software engineering and design. – They are tested rigorously and regularly to ensure their functionality and compatibility. – They are updated frequently to incorporate new features and improvements.

Our products have the following development, production, delivery, Installation, maintenance, and support processes:

– We use an agile methodology to develop our products in short iterations based on customer feedback and market research. – We use a cloud service provider to host our products on secure servers that have high availability and performance. – We use a subscription-based model to deliver our products to our customers via the internet. – We provide online tutorials and manuals to help our customers install and use our products easily. – We provide 24/7 technical support via phone, email, chat, and social media to help our customers resolve any issues or questions they may have.

We own the intellectual property rights to our products, including the source code, design, logo, name, and domain. We have registered our trademark with the U.S. Patent and Trademark Office (USPTO) and obtained a patent for our unique algorithm that powers our products. We also have licenses from various third-party providers that we use to enhance our products’ functionality and security.

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6. marketing and sales.

This section outlines the marketing strategy and sales plan for your business. It should describe how you plan to reach, attract, and retain your target customers, and how you plan to promote, price, distribute, and sell your products or services. It should also include your sales forecasts, goals, and metrics.

Our marketing strategy is based on four main elements: segmentation, targeting, positioning, and differentiation. We segment our market based on the size, industry, location, and needs of our potential customers. We target SMBs in the U.S. that have between 10 and 500 employees and operate in various industries such as retail, manufacturing, healthcare, education, and professional services.

 We position our business as a one-stop shop for SMBs that need cloud-based solutions to run their businesses efficiently and securely. We differentiate our business by offering superior quality, value, innovation, and customer satisfaction. Our marketing mix consists of four main components: product, price, place, and promotion. 

Our product is a suite of cloud-based software solutions for SMBs that help them manage their accounting, invoicing, payroll, inventory, and CRM processes more efficiently and securely. Our price is based on a subscription-based model that allows SMBs to pay only for what they use and scale up or down as needed. Our place is online via our website where we showcase our products features, benefits, testimonials, and reviews. 

Our promotion consists of various digital marketing channels such as email marketing social media marketing search engine optimization (SEO) search engine marketing (SEM) content marketing influencer marketing referral marketing

Our sales plan consists of three main stages: lead generation lead conversion customer retention We generate leads by using various online platforms such as Google Ads Facebook Ads LinkedIn.

7. Funding Request

This section should describe how much funding you need and how you plan to use it. It should also include information about your current financial situation, such as your  cash flow  and balance sheet. You should also explain why you need the funding and how it will help your business grow. For example, if you’re looking to expand your product line or hire more staff, you might need additional funding to cover those costs.

We are seeking $500,000 in debt financing from the SBA to expand our product portfolio, increase our marketing efforts, and hire more staff.

8. Financial Projections

• This section should include financial statements such as income statements, balance sheets, and cash flow statements. It should also include a break-even analysis and a description of how you plan to finance your business. You should provide detailed projections for the next three to five years, including revenue, expenses, and profits. For example, if you’re seeking funding from investors or lenders, they will want to see your financial projections to determine the potential return on investment.

We expect to generate $2 million in revenue and $500,000 in net income in the first year of operation, and grow at an annual rate of 25% for the next five years. We will finance our business through a combination of debt financing and equity financing from investors.

How To Format And Present Your SBA Business Plan?

If you are planning to apply for a Small Business Administration (SBA) loan, you will need to prepare a business plan that meets the SBA’s requirements. A business plan is a document that describes your business’s goals, strategies, market, financial projections, and management team. It also shows how you will use the loan funds and how you will repay them.

A well-written business plan can help you convince lenders and investors that your business is viable and worth supporting. However, writing a business plan can be challenging, especially if you are not familiar with the format and content that the SBA expects. Here are some tips on how to format and present your SBA business plan:

– Follow the SBA’s recommended outline. The SBA provides a detailed outline of the sections and sub-sections that your business plan should include. You can find the outline on the SBA website or download a template from various online sources. The outline covers the following topics: executive summary, company description, market analysis, organization and management, service or product line, marketing and sales, funding request, financial projections, and appendix. – Use clear and concise language. Your business plan should be easy to read and understand by anyone who reviews it. Avoid using jargon, technical terms, or acronyms that may confuse your readers. Use simple sentences and paragraphs, and use bullet points, tables, charts, and graphs to illustrate your points. Use headings and sub-headings to organize your information and make it easy to scan. – Provide evidence and support for your claims. Your business plan should not be based on assumptions or guesses. You should provide factual data and analysis to back up your statements about your market, competitors, customers, industry trends, financial projections, and so on. You can use primary sources (such as surveys, interviews, or testimonials) or secondary sources (such as reports, articles, or statistics) to support your claims. Make sure to cite your sources properly and include them in the appendix. – Be realistic and honest. Your business plan should reflect the true state of your business and its potential. Do not exaggerate or overestimate your strengths, opportunities, or prospects. Do not underestimate or ignore your weaknesses, threats, or risks. Be honest about the challenges you face and how you plan to overcome them. Be realistic about the amount of money you need and how you will use it. Do not make promises or guarantees that you cannot keep. – Proofread and edit your business plan. Before you submit your business plan to the SBA or any other lender or investor, make sure to check it for errors and inconsistencies. Use a spell-checker and a grammar-checker tool to catch any typos or mistakes. Ask someone else to read your business plan and give you feedback. Make sure your business plan is complete, accurate, coherent, and professional.

Recommended: How To Write A Business Plan In Just 7 Simple Steps

Other SBA Business Plan Templates That Can Help You Prove a Loan With Your SBA Business Plan

• Coffee Shop Business Plan Template
• Snack Bar Business Plan Template
• Food Hall Business Plan Template
• Printing Shop Business Plan Template

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Wondering What a Sample SBA 7(a) Loan Proposal Looks Like?

If you're a hands-on learner (and the type who likes to be insanely prepared), you likely want to know what an SBA loan proposal might look like before you jump into the arduous process of applying for one. That's what we're here for! In our sample loan proposal, see a filled-out version of a real S

In our sample loan proposal, see a filled-out version of a real SBA 7(a) loan application, which includes:

Applicant and business information

Business history

Operational information (vendors, marketing, risks, etc.)

Financial information

Legal information

Project-specific information

or, to learn more about SBA 7(a) loans and get a free quote, simply CLICK the button below!

Related questions, what are the requirements for an sba 7(a) loan proposal.

The requirements for an SBA 7(a) loan proposal include providing personal financial statements from all principals who have invested 20% or more in the business, and submitting personal tax records if required. Check this Loan Proposal to see what a sample SBA Loan Proposal Looks Like.

What documents are needed to apply for an SBA 7(a) loan?

To apply for an SBA 7(a) loan, you will need to provide the following documents:

• SBA Form 1919 (borrower information form)
• SBA Form 912 (statement of personal history)
• SBA Form 413 (personal financial statement)
• Financial statements , including a balance sheet, profit and loss, and income projection
• Agreement to purchase the business
• Letter of intent to buy the business
• Business tax returns for the past three years
• Any outstanding business debt
• Long-term business contracts
• Documentation of business assets
• Business lease agreement
• Incorporation documents and/or business license
• Business plan

In addition, the SBA will usually order an independent business appraisal to give lenders an idea of what the true value of the business is.

The SBA allows applicants to get help (for example, from a lawyer or a translator) filling out the application paperwork, but your lender will be required to submit information about who gave you help to the SBA, so you’ll need to document who this person is as well.

What are the advantages of an SBA 7(a) loan?

The advantages of an SBA 7(a) loan include:

• Highly competitive, low interest rates
• Long loan terms , up to 25 years
• Fixed and variable-rate options are available
• A variety of businesses are eligible
• Low down payments , typically around 10-20%
• Variety of loan options, including SBA 7(a) express loans, SBA 7(a) CAPLines
• Most SBA loans, including 7(a) loans are fully amortizing, meaning borrowers don’t have to worry about balloon payments

What are the eligibility requirements for an SBA 7(a) loan?

The eligibility requirements for an SBA 7(a) loan include:

• The business must meet the SBA's size standards for its particular industry.
• The business must have fewer than 500 employees and less than $7.5 million in revenue each year for the previous three years.
• The business must physically be based in the U.S. and operate within the U.S. and its territories.
• The business must operate for profit.
• Business owners must first have used other sources of financing, including personal funds, in order to qualify.
• Businesses must not be involved in lending, real estate, or speculation.
• Your business must operate for profit. Nonprofits and not-for-profit businesses are not eligible.
• You must also have some equity in the business — this could mean you already have a profitable business, or you could use your own personal equity as collateral.
• If you have any alternative financial resources, you must have used them first. For example, if you have a personal savings account or are able to get a personal loan, then you must first pursue those options before applying for an SBA 7(a) loan.
• The business owner cannot be on parole.
• You must be doing business in the U.S. or its territories.

What is the maximum amount of an SBA 7(a) loan?

The maximum amount of an SBA 7(a) loan is $5 million . If you borrow the maximum, the SBA will be funding $3,750,000 of the loan and your private lender will cover the rest.

For smaller loans, it might be a good idea to check out one of the SBA's other loan programs, like the 7(a) Small Loan or the Express Loan. Alternately, if you need more than the max amount of $5 million, the SBA 504 program or another loan is a better fit.

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