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

Owner Dependency + Branding Risk

• Is the owner responsible for product curation, displays, or supplier relationships?
• Would customers return without the owner present?
• Is goodwill tied to the owner’s persona or the store’s brand?
• Has a market salary been substituted for the owner’s labor?

Inventory + Seasonality Review

• Is inventory itemized, verified, and valued separately?
• Are sales dependent on holidays, trends, or specific product lines?
• Is inventory counted both in working capital and goodwill?
• Have seasonal spikes been normalized in the cash flow?

CapEx + Store Setup Risk

• Are store fixtures, signage, POS systems, or decor in working order?
• Has CapEx been included in free cash flow?
• Are leasehold improvements owned, leased, or omitted?
• Are retail systems scalable or custom to the owner’s operation?

Red Flags

• Owner is the brand and does all merchandising
• Inventory not listed or included in goodwill
• Addbacks include home office expenses, travel, or unsubstantiated perks
• Seasonal income with no smoothing applied

SBA SOP Tip

Retail businesses must reflect normalized cash flow, transferable systems, and clear inventory valuation. SBA lenders should confirm CapEx and verify owner dependency risks are addressed.