How to Write a Business Plan for an SBA Loan (2026 Requirements)

Why the SBA Requires a Business Plan

If you're applying for an SBA 7(a) or 504 loan, the business plan isn't optional — it's the foundation of your application. Lenders use it to evaluate whether your business can repay the loan. According to the SBA, applications with comprehensive business plans are significantly more likely to receive approval.

The SBA doesn't publish a rigid template, but lenders who process SBA loans have clear expectations. Missing any of these sections can delay your application by weeks or get it rejected outright.

What SBA Lenders Actually Look For

Forget the generic business plan advice. SBA lenders care about specific things:

• Ability to repay — Your financial projections need to show sufficient cash flow to cover loan payments with a margin of safety (typically 1.25x debt service coverage ratio)
• Management experience — The executive summary must demonstrate that you or your team have relevant industry experience
• Collateral — For 7(a) loans over $350,000, lenders require collateral documentation referenced in your plan
• Market viability — Your market analysis needs real data, not optimistic guesses

The 8 Sections Every SBA Business Plan Needs

1. Executive Summary

Write this last but put it first. It should be 1-2 pages summarizing your business, the loan amount requested, and how the funds will be used. SBA lenders often decide whether to keep reading based on this section alone.

2. Company Description

Legal structure (LLC, S-Corp, etc.), date founded, location, mission statement, and the specific problem your business solves. Include your NAICS code — lenders use this to benchmark your projections against industry averages.

3. Market Analysis

This is where most applicants fall short. You need: total addressable market size with sources, target customer demographics, market trends, and competitive analysis. Use data from IBISWorld, Census Bureau, or industry associations — not just "the market is growing."

4. Organization & Management

Bios of key team members emphasizing relevant experience. If you're a first-time business owner, highlight transferable skills and any advisory board members. SBA lenders weight management experience heavily.

5. Products or Services

What you sell, your pricing model, cost of goods sold, and competitive advantages. Include any intellectual property, patents, or proprietary processes.

6. Marketing & Sales Strategy

How you'll acquire customers, your sales process, marketing channels, and customer acquisition cost estimates. Lenders want to see that you have a realistic plan to generate the revenue in your projections.

7. Financial Projections

This is the most critical section for SBA lenders. You need:

• 3-year income statement (profit & loss) projections
• Monthly cash flow projections for Year 1
• Balance sheet projections
• Break-even analysis
• Use of loan funds breakdown

Your projections must be defensible. Lenders will compare your margins and growth rates against industry benchmarks. Overly optimistic numbers are a red flag.

8. Appendix

Personal financial statements, tax returns (2-3 years if existing business), legal documents, permits/licenses, and any contracts or letters of intent.

Common Mistakes That Get SBA Applications Rejected

• No debt service coverage — Your projections show revenue but don't account for the loan payment itself
• Unsourced market data — "The restaurant industry is worth billions" without a specific citation
• Missing personal financial statement — Required for any owner with 20%+ ownership
• Inconsistent numbers — Revenue in the executive summary doesn't match the financial projections
• No use-of-funds breakdown — Lenders need to know exactly how the loan will be spent

How Long Should an SBA Business Plan Be?

Most successful SBA business plans are 15-25 pages plus appendices. Shorter plans lack the detail lenders need. Longer plans often contain filler that obscures the key information. Focus on substance over length.

Creating a comprehensive SBA-ready business plan is one of the most important steps in your loan application. The financial projections alone can take weeks to build manually — but they don't have to.