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

🧑‍🏫 Licensing, Owner Dependency & Staffing

• Is the owner the only licensed professional engineer (PE) in the firm?
• Has a market-rate replacement wage been applied for the owner’s technical and managerial role?
• Is there junior staff or succession planning in place?
• Can the business operate or transfer without the owner’s license or credentials?

📐 Revenue Streams & Client Relationships

• Is income project-based or recurring through service retainers/contracts?
• Is revenue dependent on personal relationships with clients or municipalities?
• What percent of revenue comes from the top 3 clients?
• Are proposals, renewals, and client pipelines documented?

⏱️ Cash Flow Timing & Billing Cycles

• What are the average A/R days and billing cycle lengths?
• Are revenue recognition and project milestones clearly documented?
• Is there risk of cash flow mismatch due to long project lead times?
• Are retainers or deposits collected upfront to mitigate timing gaps?

📊 Addbacks & Operational Tools

• Are addbacks valid and well-documented (e.g., no personal travel, vague vehicle charges)?
• Are time tracking, project management, or CRM systems in place?
• Is goodwill assignable beyond the owner’s personal brand or license?
• Is there dependency on key uncontracted subcontractors?

🚩 Red Flags

• Owner is the only PE or billable staff member
• Over 50% of revenue from a single public contract or agency
• No junior staff or documented transition plan
• Unrealistic addbacks tied to vehicle use, travel, or unbilled time

📌 SBA SOP Tip

Engineering firm underwriters must adjust for license dependency, normalize owner labor, and assess the continuity of key client relationships. Sustainable value depends on transferable goodwill, staff depth, and a documented project pipeline.or labor licensing, and include recurring CapEx to align with SBA valuation requirements.