What this form is for
This document is used by entrepreneurs seeking SBA loans, term financing, or lines of credit over 50,000 dollars. Banks require it to evaluate your business model, repayment ability, and growth strategy before approving credit.
Before you start
- Three years of business tax returns if you are an existing business, or detailed startup cost estimates if you are launching
- Current personal financial statement showing assets, liabilities, and net worth for all owners with 20 percent or greater stake
- Monthly profit and loss statements for the past 12 months, plus your most recent balance sheet
- Market research data including competitor pricing, target customer demographics, and realistic sales forecasts
- Legal documents such as articles of incorporation, operating agreement, franchise agreement, and any existing lease or purchase contracts
Step-by-step
1. Complete the executive summary last, even though it appears first. Write one page summarizing your business concept, target market, competitive advantage, loan amount requested, and how you will use the funds.
2. Describe your company history and ownership structure. Include formation date, legal entity type, principal owners with ownership percentages, and key management experience. If you have not yet chosen your governing state, select one now because entity rules and tax treatment vary significantly by jurisdiction.
3. Detail your products or services. Explain what you sell, your pricing model, supplier relationships, and any intellectual property or proprietary processes.
4. Conduct your market analysis. Identify your target customers with demographic detail, quantify your addressable market size, name your top three competitors, and explain your differentiation strategy.
5. Outline your marketing and sales plan. Specify your customer acquisition channels, advertising budget, sales process, and first-year customer targets.
6. Provide your use of funds table. Break down exactly how you will spend loan proceeds by category such as equipment, inventory, working capital, leasehold improvements, and debt refinancing. Dollar amounts must match your loan request.
7. Build your three-year financial projections. Include monthly cash flow for year one, then quarterly or annual for years two and three. Show revenue, cost of goods sold, operating expenses, and net income. Highlight break-even month.
8. Attach your supporting documents in an appendix: resumes of key managers, credit reports, legal contracts, letters of intent from customers, and equipment quotes.
What lenders look for
- Underwriters compare your projected revenue growth to industry benchmarks. If you forecast 300 percent growth in year two without explaining new locations, contracts, or hires, your plan loses credibility.
- The use of funds must tie directly to revenue assumptions. If you are buying equipment to increase production capacity, your sales forecast should reflect that added capacity within a realistic timeframe.
- Banks calculate debt service coverage ratio from your projections. Ensure your net income plus depreciation exceeds 1.25 times your proposed annual loan payments or you will likely face denial.