SBA 7(a) Q&A
Short answer
Yes, your business plan and financial projections must be detailed, realistic, and demonstrate the acquired business's ability to repay the loan.
The SBA requires lenders to apply prudent lending standards, which includes a thorough review of the business plan and financial projections. The plan should outline the acquisition strategy, operational changes, marketing, and management. Projections (typically 3 years) must be well-supported by assumptions, showing sufficient cash flow to cover debt service, operational expenses, and reasonable owner compensation. Unrealistic projections are a common reason for denial.
For a $900,000 acquisition loan, your business plan should detail your post-acquisition strategy, and your financial projections must show at least a 1.25x debt service coverage ratio based on conservative revenue and expense assumptions for the next three years.
Insider move
Lenders scrutinize the business plan and projections to assess the viability of the acquired business and the borrower's capacity to manage it. They look for consistency, logical assumptions, and a clear path to profitability and debt repayment, often seeking conservative estimates.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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