Why the Business Plan Is the Lender’s First Test

You’ve sourced a viable target business to acquire. The business performs. The seller is engaged. You are pre-qualified. Still, one document can determine whether your transaction proceeds or collapses:

The business plan.

For SBA lenders, the business plan is not ceremonial. It is a proxy for managerial credibility and operational command. It must present a coherent thesis: that the buyer is capable of operating the business, preserving its revenue base, and servicing debt under conservative scenarios.

The business plan addresses implicit questions:

• Does the buyer understand the economic and operational drivers of the target?
• Is the transition plan detailed and viable?
• Are growth assumptions supported by precedent or operational leverage?

A templated plan, devoid of insight, often signals borrower unpreparedness and stalls approval. Conversely, a tightly argued plan accelerates underwriting and builds lender confidence.

The SBA Acquisition Business Plan: A Practical Guide for SMB Buyers

Buying a small business with an SBA loan?

Then the business plan isn’t just paperwork—it’s a critical part of loan approval.

Lenders use your plan to underwrite two things: the deal and the operator. It’s their way of answering the following questions:

1. Can this person run this business?
2. Will the business cash flow service the debt?

Here’s a practical framework to build an SBA-ready business plan that earns lender confidence and moves your deal forward.

Why Most Plans Fail to Persuade

The proliferation of plan-writing services has led to an unfortunate dilution in quality. Many deliver generic documents produced by individuals unfamiliar with acquisition dynamics. The result is predictable: boilerplate narratives, absent any operational realism.

Underwriters want:

• Logical alignment between buyer skillset and business demands
• Detailed transition frameworks
• Evidence of financial literacy
• A risk-mitigated path to post-close execution

Plans that fail to address workforce continuity, client retention, and competitive response are flagged. And often, declined.

Keep the plan concise:15 to 20 pages max. Make it clear, structured and lender-ready. Remember: this isn’t a pitch deck. It’s a risk assessment document.

Writing a lender-ready business plan doesn’t require fluff. Instead, it requires clarity. It’s about demonstrating readiness, experience and a stable path to cash flow. Use the plan to answer every lender question before they ask.

The Structure of the Business Plan

EXECUTIVE SUMMARY

Summarize the following questions in 1 page:

• Buyer Name?
• Seller(s) Name(s)?
• Transaction Service Providers?
• (M&A Attorney, QOE Accountant, Lender etc)
• Business Overview? Business History?
• Product/Services?
• Employees Overview?
• Hours of Operation?
• What is last year’s revenue?
• Last year’s EBITDA?
• EBITDA margin?
• Current year’s revenue expectation?
• Annual Revenue Growth Rate % Expectation?

BUSINESS SERVICES

Services Offered

• What are the exact services provided? Summarize in 2-3 sentences
• Service 1: ? (X% of revenue)
• Service 2: ? (X% of revenue)
• Service 3: ? (X% of revenue)

Future Services

• Will the business offer new services next year post-acquisition?

Service Area

• What is the service area for the business?

CUSTOMER PROFILE

Customer Profile

• Summarize the Customer Profile in 2-3 sentences.

Key Customer Segments

• Customer Segment 1: ? (X% of revenue)
• Customer Segment 2: ? (X% of revenue)
• Customer Segment 3: ? (X% of revenue)

Customer Concentration

• Does any single customer account for more than 20% of annual revenue?

Customer Retention & Churn

• How do you retain customers?
• Why do customers churn?

Recurring Revenue Customer Profile

• Does this business have recurring revenue from customers?

New Customer Acquisition

• How do you acquire new customers? Summarize in 2-3 sentences.

CRM (Client Relationship Management)

• What software do you use for client relationship management?

Testimonials

• Insert positive testimonials from Google Review.

COMPETITION

Competitors

• List top 3 competitors in your market:
• Competitor 1:
  • Services Offered:
  • Services Area:
  • Location:
  • Website:
  • Repeat for 2 more competitors

Competition Analysis

• Write 1 negative sentence for each Competitor. Go to their online reviews and filter reviews by lowest rating. Summarize in 3-4 sentences.

Competitive Advantage

• What is the competitive advantage of this business? What differentiates this business from the competition? Summarize in 3-4 sentences.

OPERATIONS

Business Structure

• What is the legal structure for the business? (LLC, S-Corp, C-Corp)

Current Management

• Who are the current owners?
• What role do they have in the business?
• What are their responsibilities?

New Management

• Who are the new owners?
• What role do they have in the business?
• What are their responsibilities?
• What work experience demonstrates the new buyers ability to operate the business?

Transition Plan

• What is the Transition Plan?
• How will the buyer operate the business and split duties among the management team?
• Identify 4 key responsibilities that Buyer will be tasked within the business
• Write 4-5 sentences on why this industry is a fit for Buyer based on transferable skills that Buyer has in this industry.
  • For example, “following closing, Buyer will be doing A, B and C.”
  • This section is very important. Lender is really drilling down on management experience in loan approval decision process Need to be clear and concise what Buyer will be doing in business.

FINANCIALS

Uses & Sources

• Insert Use & Sources table from the lender.

P&L Growth & 2 Year Projections

• What is your P&L growth plan?
• How does it tie to your 2 year projections?
• Organic growth? M&A?

Financial Projections

• Insert financial projections. Typically 2-3 year projections with Year 1 listed by month with a 2-5% revenue growth rate.
• Layer in the debt and show a DSCR of 1.25-1.5.

Financial Assumptions

• List your financial assumptions.

​

Case Study: Leveraging Narrative for Capital Access

Transaction Profile​
​Total Deal Size: $3.7M (SBA 7(a) structure with seller financing)
​Acquirer: Devi Lanka
​Target Industry: Automotive Services
​Geography: Northeastern United States

In 2024, Devi Lanka acquired a well-established automotive repair enterprise with a multi-decade track record. The business operated across several customer channels, including individual consumers, insurance referral programs, and commercial fleet contracts. Its physical infrastructure and operational systems had recently been upgraded to accommodate high-demand segments such as electric vehicle repairs and ADAS calibration services.

The deal structure included senior SBA debt, a seller note on standby, and a buyer equity contribution. Joe Thomas was engaged prior to underwriting to produce a lender-facing business plan that would withstand credit scrutiny and also serve as a blueprint for the buyer's post-close operational ramp.

The business plan Joe helped create:

• Mapped Devi Lanka’s prior leadership in global transformation programs to the human capital and vendor management challenges of the target business
• Proposed tactical upgrades to CRM and scheduling systems to increase efficiency and average repair cycle profitability
• Presented a phased expansion plan tied to demographic demand for EV and ADAS services, with clear CapEx estimates and ROI timelines
• Featured a base and downside financial model, both aligned with SBA underwriting standards, that demonstrated sufficient DSCR coverage even under margin compression scenarios
• Integrated a transition plan that addressed key employee retention and customer relationship continuity

Profile: Joe Thomas

Joe is not a content producer. He is a capital allocator and former operator.

• Co-founder, SMB Business Plans
• Managing Director, Janeiro Investments (portfolio includes venture, real estate, and lower-middle market SMBs)
• Developer of a 13,000 sq ft mixed-use commercial property
• Venture partner and diligence lead for institutional investors
• Founder, Main Street M&A Prep

His plans are crafted for underwriters and operators alike:equal parts narrative, logic, and financial discipline.

​Get in touch today​

Engagement Structure

Service Options:

• $2,500 — SBA-compliant business plan
• $4,000 — Business plan with financial projections (2-year horizon)

Includes:

• Buyer intake interview
• Business and sector review
• Custom strategic articulation
• Lender-grade formatting

Turnaround: 7–10 business days. Capacity is limited to preserve quality.

​Get in touch today​

Thanks for reading,

Matthias & Joe

Email: matthias@pioneercap.com​

Phone: (608) 421-2750

Disclaimer: The information in this newsletter is for informational purposes only and should not be considered legal or financial advice. Business buyers are encouraged to consult with their legal counsel and accountant to ensure the proper structuring of their transactions and to fully understand the tax implications of seller financing.

Thanks for reading! Feel free to reply directly to this email with any questions or thoughts.