Winning the First Mile: How Serious Buyers Prepare for SBA Underwriting at LOI

Here's the thing about signing a Letter of Intent: most buyers think it's the finish line.

It's not. It's the starting gun.

I've watched dozens of deals over the past two years, and there's a pattern that emerges every single time. The buyers who treat their LOI like a victory lap end up scrambling for weeks, buried in document requests, watching sellers get nervous, and missing closing deadlines.

The buyers who win? They treat the LOI like Day 1 of ownership. They're already thinking like operators. And most importantly, they show up to SBA underwriting locked and loaded.

In this issue, I'm walking you through exactly what that means, and why your business plan isn't just some checkbox exercise that you can phone in.

But first, let me tell you about two deals that closed in the same month last year.

One took 47 days from LOI to funding. The other took 127 days and almost died three times. Same bank. Similar deal sizes.

The difference?

One buyer was ready on Day 1. The other spent two months playing catch-up.

Guess which one you want to be?

The Business Plan Reality Check: Why It Actually Matters

Let me walk you through a hypothetical situation that illustrates how dramatically timeframes can vary based on preparation.

This isn't from a former client, but it represents patterns I see repeatedly. Imagine a buyer who's a sharp guy: 15 years at a Fortune 500 company, finance background, really knows his numbers. He wants to buy a commercial HVAC business in Ohio. Good cash flow, solid customer base, owner looking to retire.

The business had:

• $2.8M in annual revenue
• consistent EBITDA around $650K
• clean balance sheet.

On paper, it was exactly what he was looking for. The seller was motivated, the price was fair, and the buyer had his equity lined up.

When we asked to see his business plan, he sent over eight pages that could have been copied and pasted from any generic template. It talked about "leveraging synergies" and "optimizing operational efficiency." Pure corporate speak.

Here's what it didn't explain:

• How was he going to handle the fact that 60% of the business came from three large commercial clients?
• What would happen when the 67-year-old lead technician (who had every major client relationship) decided to follow the seller into retirement?
• How was a guy who spent his career in spreadsheets going to manage a business where half the value was in the trucks, tools, and technician relationships he'd never seen before?

The business plan made it sound like he was buying a SaaS company, not a trades business where success depends on showing up at 6 AM when a client's HVAC system goes down.

The bank killed the deal in week three of underwriting.

Not because the numbers were bad. Not because he didn't have the money. Because the business plan made it clear he had no idea what he was actually buying.

Three months later, I watched another buyer, a former operations manager from a logistics company, acquire a similar HVAC business in a completely different way.

His business plan was 28 pages and read like he'd already been running the company for six months. He'd identified the key employee risks, mapped out a customer diversification strategy, and had a detailed plan for the first 180 days of ownership.

His deal closed in six weeks.

These contrasting approaches show you exactly why preparation matters.

That's the real function of your business plan: proving you understand what you're getting into.

SBA lenders aren't just looking for pretty documents. They're trying to answer one fundamental question: "Is this person going to be able to run this business, or are they going to call us in six months asking for help?"

Your business plan is where you make that case.

The "Corporate America to Main Street" Challenge

Since we're talking about the HVAC example, let's address the elephant in the room. A huge percentage of our clients are coming from corporate backgrounds to buy Main Street businesses. Consultants buying landscaping companies. Finance directors buying manufacturing businesses. Marketing managers buying service companies.

This transition is absolutely doable - some of our most successful clients made exactly this jump. But it requires a different approach to your business plan.

Here's what doesn't work: pretending you have experience you don't have, or worse, acting like your corporate experience automatically translates.

Here's what does work: being honest about the transition and showing you've thought deeply about how to bridge the gap.

The Wrong Approach: "With my extensive background in process optimization and strategic planning, I am uniquely positioned to drive operational excellence in the HVAC industry."

The Right Approach: "While I don't have direct HVAC experience, I've spent eight years managing field service operations for a logistics company with 40+ drivers. I understand the challenges of managing mobile teams, maintaining equipment, and building customer relationships. Here's my specific plan for learning the technical aspects of HVAC while leveraging my operational experience..."

The second approach shows self-awareness and demonstrates you've actually thought about the transition. Banks love that.

What Actually Goes in an SBA Business Plan (The Real Version)

Forget the generic templates. Here's what SBA lenders actually want to see, based on the 90+ deals we've closed:

The Business You're Buying (Not the Business You Think You're Buying)

This isn't a copy-paste job from the seller's marketing materials. This is your analysis of what you've discovered during due diligence.

Start with the basics, but make them specific:

• Customer Analysis: Not "diversified client base," but actual names, contract terms, payment history, and relationship dynamics. If the top 5 customers represent 70% of revenue, say that. If there's one customer who hasn't paid on time in 18 months, mention that too.
• Revenue Model Deep Dive: How do they actually get paid? Is it project-based or recurring? What's the sales cycle? Are there seasonal patterns? Do they require deposits? What's the typical collection period?
• Operational Realities: What does a typical day look like? How many service calls per technician? What's the average job size? Which services are most profitable? Where are the bottlenecks?

I worked with one buyer who discovered during due diligence that a plumbing company's most profitable work came from emergency calls after 5 PM and on weekends. The seller had never mentioned this, and it completely changed the buyer's staffing strategy. That insight made it into the business plan, and the bank loved seeing that level of operational awareness.

Your Post-Acquisition Operating Plan

This is where our hypothetical HVAC buyer should have written about his 90-day plan to shadow that lead technician, his strategy for cross-training other employees, and his approach to diversifying the customer base. Instead, he wrote three paragraphs about "implementing best practices."

Here's what works better:

First 30 Days:

• Shadow the seller and key employees to understand daily operations
• Meet with top 10 customers to introduce yourself and understand their needs
• Review all vendor relationships and contracts
• Assess the condition of trucks, tools, and equipment

First 90 Days:

• Complete any required licensing or certifications
• Implement a customer diversification strategy (specific tactics, not just "grow the business")
• Cross-train employees to reduce key person dependencies
• Establish performance metrics and reporting systems

First Year:

• Hire and train one additional technician to support growth
• Implement a preventive maintenance program for key customers
• Upgrade the scheduling and billing system
• Build relationships with 3-5 new commercial prospects

Notice how specific this is? Every item is actionable and measurable. This tells the bank you've thought seriously about actually running the business.

Financial Projections That Connect to Reality

Your projections can't just be "last year's numbers plus 10%." They need to reflect your actual plans.

Let's stick with our hypothetical HVAC example. If you're planning to hire an additional technician in month 6, your projections should show:

• The recruitment and training costs in months 4-5
• Reduced revenue per existing technician as they spend time training
• The new technician's productivity ramp (probably 60% productive in month 1, 80% in month 2, 100% by month 3)
• The additional truck, tools, and insurance costs
• The increased revenue capacity starting in month 9

If you're planning to reduce customer concentration by targeting smaller commercial clients, show how that impacts your average job size, collection periods, and profit margins.

Most importantly: every major assumption in your projections should tie back to something specific in your business plan narrative.

I've seen too many business plans where the narrative talks about "maintaining current operations" while the projections show 25% revenue growth. That disconnect kills credibility instantly.

Why You're the Right Person for This Business

This is where you address the elephant in the room head-on. Don't dance around your background—own it and explain how it actually helps.

If you're coming from corporate America:

• What specific skills transfer? (P&L management, customer relationship management, process improvement, team leadership)
• How will you learn what you don't know? (Industry associations, training programs, mentoring relationships)
• Why this business and this industry? (Show you've done your homework, not just buying the first deal that came along)

If you have relevant industry experience:

• How will you apply what you've learned in a different context?
• What would you do differently than the current owner?
• How will you avoid the common pitfalls you've seen in similar businesses?

The successful operations manager from the logistics company (the second part of our hypothetical example) wrote two full pages about his transition plan. He'd already enrolled in an HVAC fundamentals course, identified a retired HVAC contractor who agreed to consult for six months, and mapped out which industry trade shows he'd attend in his first year.

That level of preparation tells a bank you're serious about making this work.

Industry Analysis That Shows You Get the Big Picture

Don't just copy and paste from IBISWorld reports. Show that you understand the specific dynamics affecting your business:

• How is the industry changing? (Regulatory changes, technology trends, competitive pressures)
• What are the growth drivers and risks?
• How does your business fit into the broader landscape?
• What trends are affecting customer behavior?

For that hypothetical HVAC business, the buyer could have discussed the shift toward energy-efficient systems, the aging commercial building stock creating replacement opportunities, or the shortage of skilled technicians driving up labor costs.

This shows the bank you understand the context your business operates in, not just the business itself.

The Supporting Documents That Actually Matter

Here's what else you need ready for Day 1 of underwriting, with the level of detail that actually makes a difference:

Clean Seller Financials (With Your Analysis)

Three years of business tax returns: Get the complete returns, all schedules, all attachments. Don't accept "summary" versions or recreated documents.

Year-to-date financials: These need to be current through the most recent month end. If you're submitting in July and the YTD financials only go through April, that's a red flag.

Monthly P&Ls for the prior year: This is where you spot seasonality patterns, expense timing, and revenue fluctuations. A landscaping business better show higher revenue in summer months. A tax prep business better show the opposite.

Your analysis: Don't just submit the raw documents. Include a brief analysis showing you understand what you're looking at. Point out seasonal patterns, one-time expenses, or unusual items. This proves you've actually reviewed the financials, not just collected them.

Your Personal Financial Package (Done Right)

Credit report: Pull your own credit report 60 days before you plan to submit. If there are any surprises, you want time to address them. A single late payment from three years ago probably won't kill your deal, but an undisclosed defaulted loan will.

Resume that tells the right story: This isn't your generic LinkedIn profile. Tailor it to highlight experience relevant to running this specific business. Emphasize leadership experience, P&L responsibility, customer management, and any operational roles.

SBA Personal Financial Statement (Form 413): This form is a pain, but it's critical. Every line must be completed accurately. If you leave something blank, the bank will ask about it. If you estimate incorrectly, you'll need to explain the discrepancy later.

Common mistakes on Form 413:

• Underestimating your monthly living expenses (they'll compare this to your tax returns)
• Forgetting to include retirement accounts or life insurance cash value
• Not including contingent liabilities (like co-signed loans)
• Rounding numbers instead of being precise

Three years of personal tax returns: All pages, all schedules. Don't submit unsigned copies or drafts. If you filed extensions, include the extension forms.

Projections That Pass the Sniff Test

Your financial projections are where many deals die. Not because the math is wrong, but because the assumptions don't make sense.

Monthly cash flow for three years: Show monthly detail for at least the first year, quarterly for years two and three. This level of detail forces you to think about timing, seasonality, and cash flow management.

Documented assumptions: Every major assumption should be explained and justified. Don't just project 5% annual revenue growth—explain why you expect that growth and how you'll achieve it.

Debt service coverage that makes sense: SBA lenders want to see consistent debt service coverage above 1.20x. If your projections show exactly 1.20x coverage every month, that looks suspicious. Real businesses have fluctuations.

Sensitivity analysis: Show what happens if revenue is 10% lower than projected, or if a key customer is lost, or if you have to hire additional staff earlier than planned. This proves you've thought about downside scenarios.

The Documents Nobody Talks About (But Banks Always Ask For)

Beyond the standard package, here are the documents that can slow down your deal if you're not prepared:

Entity Formation Documents

• Articles of Incorporation or Organization
• Operating Agreement or Bylaws
• EIN Letter from the IRS
• Certificate of Good Standing

Pro tip: Don't wait for loan approval to form your entity. Start this process immediately after LOI signing. Entity formation can take 2-3 weeks in some states, and banks won't begin underwriting without these documents.

Insurance Documentation

• Proof of general liability insurance
• Workers compensation coverage
• Professional liability (if applicable)
• Key person life insurance analysis

Many banks now require life insurance on the buyer equal to the loan amount. Start this process early—health underwriting can take weeks.

Licensing and Permits

• Business licenses
• Professional licenses (if applicable)
• Operating permits
• Seller's transfer documentation

For trades businesses, this gets complicated fast. If the business requires a contractor's license, and that license is tied to the seller, you need a clear plan for maintaining licensing post-close.

The Hidden Cost of Poor Preparation

Beyond the obvious delays, poor preparation creates a cascade of problems:

Document Fatigue: When you're constantly scrambling to find documents, you start making mistakes. I've seen buyers submit the wrong year's tax returns, incomplete financial statements, or outdated business plans. Each mistake requires another round of explanations and corrections.

Credibility Erosion: Every document request makes you look less prepared. By the time you're on your fifth round of "just one more thing," the bank is questioning whether you can actually run a business.

Team Frustration: Your lawyer, accountant, and broker all want to see you succeed. But when you're disorganized, you waste their time and test their patience. Good advisors have plenty of clients—they'll prioritize the ones who make their lives easier.

Opportunity Cost: While you're scrambling to get organized, other buyers are moving forward. In competitive markets, the prepared buyer wins.

Common Business Plan Mistakes That Kill Deals

After reviewing hundreds of business plans, here are the mistakes I see over and over:

The Generic Template Problem

Most business plans read like they were written by someone who's never seen the actual business. They use industry buzzwords and generic strategies that could apply to any company.

Bad: "We will leverage best-in-class operational methodologies to optimize customer satisfaction and drive revenue growth."

Good: "We will implement a customer callback system within 24 hours of service completion and track customer satisfaction scores monthly. Based on industry benchmarks, this should improve customer retention by 15-20%."

The Experience Mismatch

Buyers either oversell their relevant experience or undersell their transferable skills.

Overselling: A software engineer claiming his coding background makes him perfect for running a construction company.

Underselling: A logistics manager not mentioning his experience managing 30+ field technicians when buying a service business.

The Financial Disconnect

Business plans that don't connect to the financial projections. The narrative talks about conservative growth while the projections show aggressive expansion.

The Risk Blindness

Plans that don't acknowledge obvious risks or challenges. Every business has vulnerabilities—pretending they don't exist makes you look naive.

Special Considerations for Different Business Types

Your business plan approach needs to vary based on what you're buying:

Service Businesses (HVAC, Plumbing, Electrical)

• Employee retention and training plans
• Equipment replacement schedules
• Customer diversification strategies
• Licensing and certification requirements

Manufacturing/Distribution

• Supply chain risk management
• Equipment condition and replacement
• Customer concentration analysis
• Working capital management

Retail/Restaurant

• Location and lease analysis
• Competition and market saturation
• Inventory management
• Seasonal planning

Professional Services

• Client retention strategies
• Key employee agreements
• Business development plans
• Technology and systems upgrades

The Timeline That Actually Works

Here's the realistic timeline for getting everything ready:

60 Days Before LOI:

• Start gathering personal financial documents
• Begin drafting your business plan outline
• Form your acquisition entity
• Line up your advisory team

30 Days Before LOI:

• Gather seller financial documents
• Continue personal document collection
• Apply for business insurance quotes
• Prepare due diligence checklist

LOI Week:

• Execute LOI
• Begin comprehensive due diligence
• Schedule bank meetings
• Start purchase agreement discussions

Immediately Post-LOI (First 2 Weeks):

• Draft your business plan first version based on due diligence findings
• Start building financial projections using actual business data
• Complete entity formation documentation
• Initiate licensing transfer research

Weeks 3-4 Post-LOI:

• Finalize business plan
• Complete financial projections
• Gather all supporting documents
• Submit complete loan package

Most buyers do this backwards—they sign the LOI first, then start thinking about financing months later. The smart approach is to begin serious business plan and projection work immediately after LOI acceptance while the due diligence findings are fresh.

The Bottom Line: You Only Get One Shot at First Impressions

Here's what I learned from that hypothetical HVAC example, and dozens of real deals like it: preparation isn't just about having documents ready. It's about demonstrating you understand what you're buying and have a real plan to run it successfully.

The buyers who close deals aren't necessarily the ones with the most experience or the most money. They're the ones who show up ready to prove they can execute.

Banks fund people they believe in. Your business plan, financial projections, and supporting documents are your opportunity to build that belief. You get one chance to make that first impression—make it count.

At Pioneer Capital Advisory, we spend a lot of time with buyers on this exact preparation work. Not because we love writing business plans (though we're pretty good at it), but because we've seen how much easier everything else becomes when you start from a position of strength.

If you're working on a deal and want to make sure you're approaching underwriting the right way, we'd love to help. The best time to start this preparation isn't after you sign your LOI—it's before you even submit it.

We've developed a systematic approach to buyer preparation that covers everything in this newsletter and more. Our clients show up to Day 1 of underwriting with complete packages, realistic projections, and business plans that tell compelling stories.

Because here's the truth: in today's SBA lending environment, being "pretty good" isn't good enough. The deals that close are the ones where every detail has been thought through, every document is ready, and every assumption can be defended.

Ready to get started?

​Schedule a Buyer Strategy Call​

or reach out anytime at matthias@pioneercap.com

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.