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. Set yourself up for success by learning how business plans impact loan approval and which critical elements to include.
What is a business plan?
Many entrepreneurs talk about their business plan — whether it’s stored only in their minds or scratched on napkin — but truly savvy business owners take the time author a well-written one. So what exactly is a business plan?
A business plan is a living document (meaning it can and should be updated as your business progresses) with a three- to five-year outlook into your business. It should provide an overall summary of where the business is headed, plans for growth and projected revenue. Business plans take time, research and due diligence, but the reward is organized and actionable steps to grow your business. In fact, companies with a formal written business plan see a 30 percent increase in growth compared to those that don’t.
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How does a business plan help you get an SBA loan?
Outside of your basic eligibility requirements (see Chapter 2 for the 5 C’s), your business plan is the top element lenders will review to determine your attractiveness as a borrower. Having a solid business plan with clear ideas makes it easier it is for banks to see that your business will be successful, and therefore that you’ll be able to repay the loan. However, business plans are not a one-size-fits-all endeavor. If you’re running an independent business or launching a start-up, the importance of your business plan carries additional weight and will be more carefully scrutinized. If you’re funding the purchase of a franchise, the competitive analysis and management sections will be more closely reviewed than others because the business model has already proven successful.
Writing a business plan can sound intimidating, but even a thorough plan only needs to be seven to ten pages. Check out our free eBook and business plan template to help guide you through the process, and keep reading for an overview of each section of the business plan.
The 10 Elements of a Business Plan
Business Plan software, free download For Mac Sba Loan
Whether you’re writing a business plan as a part of your SBA loan application package or not, there are 10 essential elements to include. Here’s a look at what those sections are as well what’s included in a complete plan.