The Do’s and Don’ts of Writing a Business Plan That Will Get Approved

If you are a business owner, the odds of getting approved for a loan from your local bank are slim. This means that you have to find other sources for funding. One option is the SBA (Small Business Administration). 

The SBA has a set of criteria that they use to judge whether or not a business plan is viable and should be approved. You may have a great idea, but if your business plan doesn’t meet the requirements you will be denied funding from the SBA. Read more because we will talk about how to make sure your business plan meets the requirements so it can get approved by the SBA! 

As part of this process, it is important to know what types of plans are eligible for SBA loans and which are not. For example, the 7(a) program includes fixed asset financing for equipment leasing and other purposes, but it does not cover real estate purchases. The 504 loan is great for commercial improvements because it can finance any type of renovating or reconstructing a business property (like your office). To know what type of program suits your business, click here.


In order to qualify for an SBA loan, applicants need to go through some steps:


1. Identify opportunities and challenges 

Businesses must identify their opportunities and challenges. These are important because you can’t develop strategies unless you know what is available for your business to utilize. For example, the business may see that there is a lack of good, affordable housing in the area so they want to build new houses. That’s great if it fits within the company’s mission, but if it doesn’t then the business should think of other ways to make money.


2. Develop strategies based on opportunities and challenges 

With this information, you can develop strategies to take advantage of the available opportunities. For example, if there is a lot of demand for new housing in an area where you want to build your office then one strategy may be investing in building affordable homes so more people move into the area which makes you more customers.


3. Create financial projections  -Profit and Loss (P&L) Statement, Balance Sheet, Cash Flow Statement

Your financial statements show how much money your company will make or lose each year. The SBA looks at these statements to make sure a business can repay the loan and still have a net profit for their investors after accounting for all costs. If a company isn’t profitable, then there is no point in investing in it because it won’t be able to provide any returns.


4. Propose a plan of action to address issues 

You need to describe how you are going to execute the strategies. This should include the timeline for completion, key milestones, and the resources needed.


5. Get started on your project!   

If you want more detailed information: Visit the SBA website: If you can’t find what you’re looking for try these resources: Business Plan Software: Other resources:


Here are some do’s and don’ts to keep in mind when writing up an SBA plan:


1. DO write about why you’re looking for financing. 

Why does your company need to expand? What goals will expansion help you reach? How much money do you need exactly (keep in mind that the bank will ask for a complete breakdown of how you will spend the money)?

Explain why the money will be used to grow the company. 

For example, expanding into new markets, improving current products/services, creating jobs for more people. You can even talk about how it’s possible that you won’t need all of the financings if your projections don’t pan out as expected (this would mean giving money back). This is a great way to show that not only are you looking for support but also responsibility.


2. DO indicate what your long-term vision is. 

In other words, what do you see yourself doing 5 years from now? What kind of expansion or improvements do you have in mind? You can even include projections of revenue and profits after these changes take place.


3. DO think about long-term plans and goals for when you pay back the loan.

If it is a long-term goal, then it’s obviously helpful if parts of the repayment can come from profits rather than all of it being interest payments. The bank would much prefer that they are eventually paid back by your company making money straight away after taking out their financing.


4. DO make sure you have a good credit history. 

You also need to make sure that your company is well established and has been running for at least 2 years. The bank takes these facts into account when looking over your application. If this information doesn’t fit, a co-signer might be required which increases the chances of you getting the loan approved.


5. DO include financial information in your plan for them for their assessment

They are most likely going to look at things like your balance sheet, cash flow statement, and income statement if they decide to invest in you.


6. DO make sure you understand all requirements before applying for financing

Include everything when submitting the application so that there isn’t any confusion or issues later on with regards to getting approved or having something excluded from the final decision. 


7. DON’T forget to add in additional costs

Costs such as transportation costs, marketing expenses, training expenses, etc… unless these things have already been taken care of in another aspect of the financing application (such as the marketing costs, for example).


8. DON’T ignore what you included in your business plan

If it seems like a lot of unnecessary information. The bank wants to make sure that they know about your company and can get a sense of who they are lending money to and if it’s worth the risk.


9. DON’T leave financial projections up to guesswork or speculation.

The numbers should be as accurate as possible so there can’t be any issues with funding later on! You don’t want to show potential investors information that may not work out because it will come off as unprofessional and could cost you valuable support from other capital sources such as venture capitalists.


10. DON’T copy other business plans word-for-word or use templates.

The bank will spot this instantly, and it doesn’t reflect well on your business. Make sure that the plan is 100% original! If not, re-write all of the sections to avoid being rejected.


11. DON’T forget about the market environment too!

It would be a mistake not to mention any major economic activity in your industry that could affect your company’s operations going forward. If there are any changes to the industry you operate in, explain how this will affect your plan.


12. DON’T forget that this business plan is more than just a plain financial projection!

It also needs to have an executive summary, market research, information on your competitors, marketing strategies, competitive environment analysis among other things so make sure to include these too if they are relevant to your SBA application.


That’s it for now! Good luck with your SBA loan application and we hope that this post has been helpful in guiding you through the process of writing an SBA plan that will get approved!


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