SBA Business Plan
An SBA Business Plan, also referred to as SBA Bank Loan Business Plan, is a technical document prepared by small businesses wanting to raise funds through one of the many SBA Loan Programs that the Small Business Administration offers. Different from a Strategic Business Plan, an SBA Business Plan emphasizes an organization's ability to utilize requested debt funding for operating company strategies profitably, and should address a SBA Loan Program and lay out a debt repayment structure that is achievable and devoid of major significant risks.
SBA Business Plan versus Equity Funding
When business owners are seeking capital for starting or expanding their business, the SBA offers one of the most attractive funding options out there, that is, if your business qualifies. The SBA works with approved lenders to guarantee small business loans up to 5 million dollars. The interest rates are low and the repayment terms are extremely favorable - 7 years for working capital and 20 years for loans backed by real estate. Compare these terms to other funding costs such as private investors who want permanent equity in your company, or Venture Capital firms who demand an aggressive repayment schedule PLUS 51% of your company. Your funding choice is clear, if you qualify for an SBA loan, you should try to get one. To qualify for an SBA bank loan, you will need a professionally-written SBA Business Plan.
Your SBA Business Plan Should Serve One Purpose
Unlike a Strategic Plan that is prepared for management to have a blueprint to follow, we believe that your SBA Business Plan should serve one purpose, and one purpose only - to get you approved for a loan. Modern day business plans (even those prepared by expensive Business Plan firms) tend to be prepared using boiler-plate templates that completely disregard the complicated intricacies that are essential to meeting SBA Loan Program requirements. Business Plan templates assume that your business is like everyone else's business, they are boring, they are not relevant to your unique business, and they simply do not work. It is no wonder that the vast majority of SBA Loan requests are turned down. The SBA Business Plan should be prepared to meet the one objective that brought you to this page:
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SBA Business Loan Programs
Many so-called SBA Business Plan experts have no real-world experience utilizing broad-based financing options. They may have written a couple of business plans for one purpose or another. They will try to persuade you to structure your Business Plan the exact same way. There are also online Business Plan service providers that sell Business Plan templates at a discount for you to fill out. We believe that exercising either scenario would be a grave mistake that could cause your business significant grief. The Small Business Administration summarizes of some of the more popular SBA Loan Programs at their portal listed here. You can also get more information and a useful synopsis about the SBA's programs on our SBA page.
SBA 7(a) Loan Program - Loans up to 5 million dollars for working Capital
SBA 504 Loan Program - Loans up to 5 million dollars for real estate or facility purchases
SBA Micro Loan Program - Loans under $35,000
7(a) Loan SBA Business Plan
The SBA 7(a) Business Loan Program offers business owners up to 5 million dollars in working to capital to expand their organization. A strong SBA Business Plan is a prerequisite for this program as working capital may and may not be an acceptable source of collateral.
504 Loan SBA Business Plan
The SBA 504 Business Loan Program offers business owners up to 5 million dollars to purchase real estate of other facilities that becomes the collateral for the loan. A long-term financial plan (5 years or more) in the SBA Business Plan is paramount for this type of loan.
Micro Loan SBA Business Plan
The SBA Micro Business Loan Program offers business owners up to $35,000 dollars in unsecured funding. The SBA does not require a business plan for this type of loan, but most lender request at minimum a financial plan with an executive summary.
Need More Information?
Is your business interested in obtain an SBA loan? BP Consultants is the national authority for strategic SBA Business Planning to optimize your ability to obtain an SBA loan. As a nationally renowned SBA consultant, we have developed hundreds of Business Plans and financial projections to help business owners meet their objectives. We provide expert SBA-related services, offering you as much (or as little) of our services as your project requires, always aiming at the goal of getting your business loan approved.
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SBA Loan Application - Two Applications In One
Applying for an SBA Guaranteed Business Loan is no easy matter. You are actually applying with 2 separate entities - the bank making the loan, and the SBA that's guaranteeing the loan. This one nuance is often overlooked, and is the single most significant factor to why many SBA loan applications get turned down. Most parties preparing the loan application completely neglect the fact that the application has to get the blessings of two separate underwriters; the important and very busy people behind large desks who will be making serious decisions concerning the future of your business.
How does a dual underwriting process impact your loan application? Two applications means twice the paperwork, and four times more complicated. To make matters more intricate, the lending bank and the SBA never seem to use similar application formats or document submission forms. You would think at the very least, that SBA lenders across the country would standardize their SBA loan process to match those of the SBA, but they don't. Most perplexing, when underwriting your business loan request, the two parties reviewing your loan utilize different underwriting guidelines and procedures that often are inconsistent with one another.
SBA Loan Documentation - Prepare Yourself
Consider the mountain of documents involved with submitting an SBA loan application; personal credit reports, business credit report, personal net worth statements, balance sheets, projected P&L's, cash flow statements, tax returns, management compensation schedules, uses of funds worksheets, debt-to-income ratio calculations, sales forecast, cost of sales schedules, percentage of sales growth analysis, customer acquisition cost, not to mention third-party documentation to validate those figures. Not only does each one of the documents have to stand up to the scrutiny of two separate authorities, more problematic is that each document must be consistent with one another. Just a few discrepancies within the documents or one too many unanswered questions regarding your application, and your file goes to the bottom of the stack. This cross-checking procedure is arduous, driving business applicants insane. But take comfort, there is hope!
SBA Business Plan - Never Show Them Your Strategic Plan
Of all the documents that are submitted to the bank and the SBA as part of your SBA Loan application, the single document that becomes your advocate, your ally - serving as your only voice in your physical absence - is your SBA Business Plan. And let's be crystal clear, your SBA Business Plan is not the same as your Strategic Business Plan. These two variations of your business objectives are written as different as day and night. Your Strategic Business Plan (if we may be so bold to point out) basically airs out your dirty laundry - emphasizing strategies to help you overcome threats and weaknesses that may potentially put you out of business. Your SBA Business Plan, on the other hand, is fighting hard to get you a loan - creatively tying all your information together in a nice, cohesive, complete presentation that paints a rosy picture.
Since you will be submitting only one business plan as part of the overall SBA loan application, the successful SBA Business Plan will have the challenge of addressing several key issues simultaneously:
Your SBA Business Plan will need to present all essential information found in a regular Business Plan - Company description, Product, Market, Management, Implementation, Marketing, and so forth (see our Business Plans page)
Your SBA Business Plan will need to comply with SBA underwriting guidelines
Your SBA Business Plan will also need to comply with your chosen lender's underwriting guidelines
SBA Business Plan - Lender Perspective
The good news is that your SBA lender is eager to approve your SBA loan. After all, the bank is in business to collect interest from money lent out. Since the SBA will be guaranteeing up to 85% of the loan, for the bank to approve the loan, your SBA Business Plan must make the argument through financial statements, projections, available cash reserves, owner contributions, collateral and other creative financial approaches that the non-guaranteed portion of their loan is virtually risk-free. To the bank, this is the single most important (and unspoken) gauge in determining whether your loan application is approved or denied. The second imperative (and obvious) criteria is getting the SBA to guarantee your loan.
SBA Business Plan - SBA Perspective
Here again, the SBA also wants to approve your loan application. Although the vast majority of small business loan requests do not get approved, the SBA still managed to provide over 68,000 SBA Loan guarantees in 2017, helping fund over 30 billion dollars in business loans. According to Forbes, current business loan request rates with big banks are under 26% - you shouldn't fret, it was under 8.9% in June 2011. So how can your business have the best chance at receiving the coveted SBA Loan Guarantee? Preparing a cohesive uniform application with consistent documentation, and submitting an SBA Business Plan that clearly answers all potential questions and one that is strategically designed to completely meet the guidelines of the specific SBA program you are applying for:
Application application with all relating documentation
SBA Loan Business Plan
Answers all relevant questions
Meets all guidelines for the targeted SBA Program