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

Key Review Areas

• Is owner compensation normalized based on technician vs. management roles?
• Are service contracts or recurring maintenance revenue documented?
• Are seasonality and weather variability considered in cash flow?
• Does the valuation adjust for one-time jobs or project-based spikes?
• Are warranty liabilities or callback reserves factored in?

CapEx and Fleet Considerations

• Has the vehicle fleet been appraised or depreciated properly?
• Are future truck/tool replacements included in CapEx?
• Is equipment leased, owned, or seller-retained?
• Does the valuation adjust for deferred CapEx or tool obsolescence?

Red Flags to Watch

• High concentration in new construction (cyclical risk)
• Undocumented owner labor that won’t transfer
• Significant addbacks tied to labor, marketing, or warranty expense
• Book value used without accounting for vehicle or equipment FMV

SBA SOP Tip

Free cash flow must reflect normalized owner compensation, recurring maintenance, and ongoing capital needs—not seasonal highs or temporary cost savings.