What SBA 7(a) and 504 lenders look for in a business plan: debt service coverage, collateral, management experience, and the documents that come with it.
An SBA lender is not an investor. They are not buying upside — they are underwriting downside. That single difference should reshape how you write the plan.
Can the business service the debt? Most lenders want a debt service coverage ratio (DSCR) of at least 1.15x-1.25x, calculated on projected cash flow after owner compensation. 2. Does management know this business? Direct industry experience is the strongest single qualitative factor. 3. Is there collateral and equity injection? SBA 7(a) loans commonly expect a 10% or greater injection from the borrower for startups or acquisitions. 4. Are the assumptions defensible? Every revenue line must trace to something: signed contracts, comparable locations, historical financials, or industry benchmarks.
Executive summary with loan amount, use of proceeds, and repayment source stated in the first paragraph - Management team with a résumé-level treatment of relevant operating experience - Use of proceeds table itemizing every dollar - Three-year projections with monthly detail for year one — income statement, balance sheet, and cash flow - Break-even analysis and a sensitivity case at 80% of projected revenue - Collateral schedule listing business and, where applicable, personal assets
DSCR = net operating income ÷ annual debt service. If your projected NOI is $180,000 and annual principal and interest total $140,000, your DSCR is 1.29x — comfortably above most thresholds. Show this calculation explicitly in the plan; don't make the underwriter build it.
Personal financial statement (SBA Form 413), business and personal tax returns, interim financials, a debt schedule, lease or letter of intent, and licenses. The plan is the narrative; these are the proof.