Providing a Business Plan With Your SBA Loan Application
When you apply for a mortgage loan or automobile loan, you usually don’t need to tell your loan officer your plans for your house or car. Many small business owners may wonder why the same does not hold true for an SBA loan application. SBA loans require business plans because they need to see that the small business owner has a plan for their future. Many small businesses fail due to cash flow issues, and the U.S. Small Business Administration needs to know that your business has a real plan for managing its funds.
Creating Financial Statements and Cash Flow Projections
The most important aspect of your business plan will be your financial statements and your cash flow projections. You need to show that money will be coming in, and that you will have enough money to reliably pay back your loan. To give the bank this information, you will need to have accurate and timely financial statements. These statements should go back three years, and should be able to support anything you are claiming, such as a stable increase in revenue over time.
Backing Up Your Plan with Data
The other aspect of your business plan that is extremely important is what you will be doing with the money from the SBA loan. The Small Business Administration will want to know exactly how you intend to use their funds to better your business and why you need to acquire these funds from them rather than through other avenues. If you can’t provide a reasonable plan for the future, the Small Business Administration may feel that you will simply need more loans in the future or that you don’t really need the loan they will provide.
Procuring an SBA loan may seem like a complicated process, but it’s an invaluable resource that has helped many small business owners nationwide. Most lenders will be willing to work with you over time to secure the data you need to acquire your loan, but putting in the extra effort up-front will make for a quicker and easier SBA loan application process. To get started, click here for a free business plan template download offered by the small business mentoring organization SCORE, and be sure to check out the additional wealth of resources they offer.