Noah is currently the COO at Palo Alto Software, makers of the online business plan app LivePlan.
How to Write an SBA Business Plan + Template
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.
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:
Create a business plan that maximizes your chances of securing funding.Create a fundable plan
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
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
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.
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:
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.
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.