Use this checklist to assess businesses in this industry for SBA 7(a) lending and underwriting.

👨‍💼 Owner + Family Labor Normalization

• Does the owner work full-time or cover nights/weekends?
• Are family members involved without proper compensation?
• Has owner/operator labor been replaced with market wages?
• Is payroll adequate for full store coverage across all hours?

🏷️ Margins + Inventory Treatment

• Are reported gross margins within industry norms (12-14%)?
• Are tobacco, lottery, and ATM income shown net or gross?
• Is inventory treated as part of working capital or goodwill?
• Has shrinkage, spoilage, or expired items been considered?

📊 Revenue Streams + Risk Areas

• What % of revenue comes from tobacco, lottery, or alcohol?
• Are any vendor rebate programs properly disclosed?
• Has cash-heavy revenue been cross-checked for underreporting?
• Are seasonal or irregular spikes in income explained?

🚩 Red Flags

• Margins over 14% without backup
• Inventory counted both in goodwill and WC
• Lottery/tobacco reported at gross revenue
• Addbacks that include routine personal expenses (fuel, food, family payroll)

📌 SBA SOP Tip

Convenience stores must reflect normalized labor, accurate margin treatment, and itemized inventory handling to support FMV for SBA lending.