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

Key Areas to Review

• Is owner compensation normalized?
• Are family wages properly adjusted?
• Is cash revenue disclosed or estimated?
• Are third-party delivery fees captured?
• Have merchant processing fees been accounted for?
• Are CapEx and equipment replacements included in FCF?

Common Addback Red Flags

• Marketing and sponsorships labeled ‘discretionary’ but used annually
• Large misc/other categories with vague explanations
• Tips, delivery charges, or POS fees misclassified
• Owner food costs or comps not adjusted

CapEx + Equipment Notes

• Kitchen equipment often requires cyclical reinvestment
• Table, flooring, and fixture replacements can impact cash flow
• Compare CapEx to depreciation over time

SBA SOP Tip

Free cash flow must reflect maintainable post-sale earnings. Adjust for realistic owner replacement cost and recurring capital needs.