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

Owner Compensation + Technical Oversight

• Is the owner an engineer or technician? If so, has their wage been normalized?
• Are they also managing production, QC, or customer relationships?
• Has a market wage replacement been included in cash flow analysis?

CapEx vs. Depreciation Reality Check

• Is CapEx accurately reflected in free cash flow?
• Does reported depreciation match actual reinvestment?
• Are major tools/machines nearing end-of-life?
• Is CapEx forecasted or deferred?

Customer + Revenue Risk

• Are sales dependent on 1–2 clients?
• Are contracts long-term or at-will?
• Are there margin differences across products or clients?
• Has customer churn or sales volatility been disclosed?

Asset and Equipment Review

• Are assets valued at book or FMV?
• Has an equipment appraisal been performed?
• Are leased or seller-retained assets removed from valuation?
• Are there idle, obsolete, or underutilized machines?

SBA SOP Tip

Manufacturing businesses require normalized wages, CapEx, and asset validation. Income + asset approaches should be reconciled with market-based assumptions.