Do you need a business plan for an SBA loan?
Short answer
Only when applicable. 13 CFR 120.191 lists a business plan among application contents when applicable. SOP 50 10 8.1 does not list one among the general 7(a) documents. Start-ups need detailed projections, and some export loans need an export business plan.
Only in some cases. 13 CFR 120.191 lists a business plan among application contents when applicable. SOP 50 10 8.1, Appendix 20, does not list one among the general 7(a) documents.
When the SOP asks for something like it
- Start-ups and projection-based applications. Detailed projections with supporting assumptions, showing at least 1.15:1 within 2 years of loan funding (Appendix 20, Para. A.1.d).
- International Trade loans to expand exports. The applicant must submit an export business plan, with a projection and narrative rationale (Sec. B, Ch. 5, Para. C.1.a, about p. 193).
- Export Working Capital loans. The lender's analysis discusses the applicant's export experience and export business plan (Sec. B, Ch. 5, Para. B.5).
What projections must explain
The lender must support the assumptions behind projected cash flow. That includes any revenue growth, any cut in expenses, and a comparison to current industry trends (Sec. B, Ch. 1, Para. C.2.a).
Lenders may still ask
Credit memos cover the business's history, management and competition. A lender may ask for a plan to support that analysis, and requests vary by lender.
Who can help prepare one
A packager or lender may charge for preparing a business plan, within SBA's packaging fee limits (Sec. A, Ch. 4, Paras. C.2.a and D.7). You are not required to buy that service.
Sources
- 13 CFR ยง 120.191
- SOP 50 10 8.1, Appendix 20, Para. A.1.d (about p. 417)
- SOP 50 10 8.1, Sec. B, Ch. 1, Para. C.2.a (about pp. 119-120)
- SOP 50 10 8.1, Sec. B, Ch. 5, Para. B.5, credit analysis (about p. 180)
- SOP 50 10 8.1, Sec. B, Ch. 5, Para. C.1.a (p. 193)
- SOP 50 10 8.1, Sec. A, Ch. 4, Paras. C.2.a and D.7 (about pp. 67, 76)
Ask lending partners about your loan
Tell us the amount you need and what it is for. We refer you to lenders that may fund businesses like yours, and it costs you nothing.
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