The 9-Step Business Plan Template for Your SBA Business Loan Application [2023]

The 9-Step Business Plan Template for Your SBA Business Loan Application [2022]

Are you a small to medium sized business in the United States? If so, there’s never been a better time to apply for a Small Business Association (SBA) loan. In 2020, the SBA’s flagship 7(a) lending program hit its stride and made approximately 42,000 loans that granted over .55 billion. However, the approval environment is still tricky and elusive. Less than 14% of applications are approved by large-cap banks (which have US billion and above in asset size).

So what should a small business owner do? The opportunity is still there and still worth pursuing! So, at FinModelsLabs, we have prepared this article, to help you create the best app, which includes creating an effective and compelling business plan.

We’ll go through the nine essential sections you’ll need to craft the best SBA business plan that will create a strong, comprehensive business plan that lenders will be invested in – literally. Let’s start.

Why do you need a business plan?

An SBA business plan is essential to your application because it will tell potential lenders why your opportunity is worth pursuing and investing in. base the assessment on the type of return on investment (ROI) your business will provide.

Additionally, a solid SBA business plan makes it easier to get loans approved because the presentation gives banks, lenders, and other parties confidence in your business’s ability to succeed and repay the loan.

Business plans will vary, however, depending on the nature and industry of your business. Small businesses and more niche businesses will likely get more scrutiny as there is less comparison and history, so keep that in mind.

1. Summary

This is the most important section of your SBA business plan. We repeat, this is the most important section of your SBA business plan! Not only is this the first section that potential lenders will look at, but on some occasions it may be the only PAGE Some lenders may consider if they are rushed, rushed or overworked.

The important thing to keep in mind is that the executive summary is, as the name suggests, an executive summary – so it should be a maximum of 2 pages.

So what’s going on in the executive’s summary? You can change the order of this, but generally a good executive summary consists of five sections:

1. The problem and the solution in the hearth

It’s the “what” and the “why” – what is the problem your business is solving, and why is it important? Why do you do what you do?

2. Product and/or service

What do you sell and/or do, and where? Who are you doing this to?

3. Management team

Who are you? By that, we mean – the founders, senior management, and what are your professional and educational experiences? How many teams are there and how many people in your organization? It’s an overview of the staff behind the company, so it’s important to highlight. If you have senior advisors with industry experience, include them here as well.

4. Key financial highlights and projections

Include major financial items, such as revenue, net profit, cash balance, assets, liabilities, and shareholders’ equity. What are the key metrics you use to measure and where do you expect to be (financially) in three years? Five years?

5. Request for financing

How much are you asking? It is important to quantify every dollar with a detailed use of the product, which will describe how it will be spent.

The executive summary should be an abbreviated reflection of your entire business plan, almost like a miniature version of it.

2. Company Description

This is where you explain your business in detail. From the problem(s) it solves and addresses to the solution you have developed, and end with a vision of what you plan to become the business.

What is the problem?

In answering this, you should list two to three pain points that you aim to address through your business. Keep it simple. Many business plans try to use florid language to emphasize their innovation and inimitability, but in fact some of the most effective business plans are straight to the point and highlight an obvious problem that many don’t have. not taken into account.

What solution does your company provide?

Obviously, you are solving the problem with a for-profit business solution. To expand on the above, tackle how your product and/or service works, and ii) how it benefits your consumers/customers.

It’s important to save the pain points from the first subsection, as it undoubtedly clarifies how your solution addresses existing issues. This creates value, which is a process investors want to be part of.

Here it is worth taking some time to explain what your customer profile is. Enter specific demographics: gender, age, economic experience, location, behavior, etc.

Future direction

Finally, finish the description of your company by talking about your strategy and your vision for the short and long term. Operationally, do you plan to expand (launch more products, offer more services)? Geographically, do you plan to expand locally or internationally? As for the team, are you looking to add more teams/build vertically?

3. Market plan and analysis

After discussing your business in detail, it is important to contextualize with the market in which you operate. This is also an important section for your investors, as it will show them that you have researched the industry you are fully in and that you “have time spent understanding how you compete in this space.

We recommend breaking this down into two main subsections:

1. Industry Overview

Here, address i) what is the size of your market; and ii) how fast is your market growing?

This might be difficult if you operate in a smaller niche market, but FinModelsLab has you covered: Read our article here on market sizing and estimating Tam, Sam, and SOM for your business.

Public sources of information such as public reports, company financial statements and annual reports, and market research will be your best bets.

2. Competitive Landscape

This is where you address the nuances of the market in which you operate. Again, let’s do this in two subsections: i) Market Fragmentation and ii) You vs. Your Competition.

Market fragmentation

How is your market spread out? Is it an oligopoly where there are only two or three players dominating the entire market share, or are there hundreds of smaller independent players without a single dominant leader? Build your TAM, SAM and SOM analysis and search from public sources to expression.

You versus your competitors

In this subsection, cover who your biggest competitors are; What is their reach/presence (global, regional, etc.); what comparable products they have for you; and, whether they have clear and key comparative advantages (economies of scale, IP, patents/technology).

An ideal way to display this is in a table, of your competitors along the vertical axis and the different comparable categories along the horizontal. It will save your space and provide the data clearly.

4. Key management

This is the section where you will discuss the organizational structure of your business. Whether you’re a lean team or have multiple layers of the C-suite to your contractors, an organizational board will be a much-needed addition here.

We recommend starting with the key management board, your core team and the heart of your organization. Because it is your key personnel who will invest them, because they are the engine of a small business. We recommend that you create profiles for each professional, including their previous work history, experience in the industry you are in, and also include all information about your advisors and board of directors who have experience and industry references. This will give your business an extra layer of credibility and authority and make it stand out to SBA lenders.

5. Offer of products / services

Go into details here about what you are selling. Is it a product? Is it a service? Both? This is where you can wax more detailed your offer. And while the level of detail, and even the content itself, may vary in this section depending on the nature of your business, there is a general framework that can help guide your discussion:

• What products/services do you sell?
• How many different product lines/service lines do you have?
• How are they prices? How did you arrive at the prices?
• How do the products/services work?
• Do you have any copyrights/trademarks/patents on your products?
• What does your manufacturing process look like? Discuss your suppliers and your supply chain in detail.

6. Sales and Marketing

Once you’ve explained what you do/do, it’s time to discuss how you sell it. Potential investors and lenders want to see a marketing and/or sales plan in your SBA business plan, which covers – among other items – the strategy you have for how you will acquire potential customers.

While it’s not necessary to give away every trade secret of your trade, it’s important to cover your marketing plan in enough detail so that your potential lenders/investors have an idea of how your business will go and go. will develop. To guide you, consider talking points such as:

• Do you sell online? Offline? A mixture of the two?
• What is your presence on social networks? How much of your sales strategy is it?
• What are your customer acquisition strategies?
• How do you monitor, measure and support your sales strategy?

If any of the terms above are confusing, or just for more information on customer acquisition strategies, including metrics, take a look at FinModelsLabs’ articles on the matter.

Metrics should be included in your discussion, such as customer acquisition cost (CAC), customer conversion rate, etc. Even if you’re not sure of the actual metrics your numbers are generating, include the goals you have for your business and the goals – This will show investors that you have a vision for your business.

It is important to mention how you would use the budget to raise, pay or invest in your marketing strategy, as this will be an important article for future and potential lenders. By proving that you can tie business metrics to your financial projections, it will solidify that you are an entrepreneur with a solid financial understanding, in the minds of potential lenders. Demonstrate that you understand that the link between your actual operating and financial measures and your company’s financial statements and projections is very important. Take a look at FinModelslabs’ Practical Guide to Creating a Startup Financial Model, to get started!

7. Application for funding

Here you define how much you actually need to fund the business you just have in your SBA business plan.

It is important to quantify how and where in your business you will use the desired and requested funding. This is most easily done by showing a usage breakdown of payout, where you quantify how much you spend, for example, on research and product development to develop your minimum viable product (MVP); Or, how much you would allocate to your sales and marketing budget.

An effective way to communicate this is to either present this breakdown via the table or via a pie chart so that investors can clearly see and visualize what your expenses will look like.

Part of this section includes your repayment plan: where do you plan to draw money toward your monthly repayments from? Our investment payout walkthrough is very informative and helps you understand how investment payout works, how to calculate the period it will take to pay back and everything you would need to know.

Chronology is important in this section. A standard term for named lenders in debt is ten years; Therefore, it might be more intuitive for you to break down the amount of funding you’ll need into five-year increments. This will be based on the financial snapshots of your current operations and your projections.

8. Financial statements and projections

Including financial statements and projections in your SBA business plan is a very important step. As well as flexing your financial savvy, it will form the basis of how much you ask to raise from your lenders, showing the actual numbers.

For your financial statements, you will need to submit the Three Basic Financial Statements:

1. The balance sheet
2. The income statement
3. The Cash Flow Account

These are the three indispensable and essential financial elements that every company must update and prepare constantly, on a monthly and annual basis (at least, with the help of an accountant). For more tips on how to use, read and prepare them, read our article on the three essential financial statements:

The Three Financial Statements – Ultimate Summary (and Templates)

For financial projections, start by using realistic and target (verifiable) assumptions that are taken from the market research and analysis of public information that you conducted during your market analysis.

While we are of course bullish and optimistic for our businesses, when applying for funding, the more sources you can provide to back up your assumptions is always recommended as it helps potential lenders.

Check out FinModelsLabs’ must-read article on the techniques and process of making strong and reliable financial projections:

Vital Financial Projections for Starting a Business

It’s important to keep in mind that anything and everything you present must substantiate and clearly show that your financial projections for your future cash flows will allow you to meet the debt obligations and repayment schedule you request. It sounds obvious, but lenders will take care of this with Eagle Eyes, so when assessing how much you want to borrow – make sure your cash flow can cover you.

As always, we’ve got you covered, with a clear, no-nonsense guide on how to understand, execute, and present Cash Flow Projections.

9. Appendix

If there are any supporting graphics, data, presentation materials that couldn’t fit in the business plan, this is where to put them and refer, in the body of the SBA business plan. It allows you to retain details without overloading your document.

Documents and records of licenses, permits, supplier agreements can be placed here, which gives your application more substance and content to lenders, and thus makes it more attractive. If you are creating a schedule, be sure to log as appropriate throughout your SBA business plan. Take the time to manage what’s going on – an effective appendix is well-structured and organized, rather than a repository repository of all files.

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