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

📅 Revenue Seasonality & Enrollment Patterns

• Is revenue consistent year-round or tied to school calendars?
• Are peak periods (e.g., SAT/ACT seasons, back-to-school) clearly disclosed?
• Is revenue smoothed/normalized across seasonal highs and lows?
• Are summer/winter slumps accounted for in projections?

🧑‍🏫 Owner Dependency & Instruction Risk

• Is the owner also the lead instructor or curriculum developer?
• Has a market wage been applied for owner teaching hours?
• Are qualified staff or contractors available to replace owner services?
• Is there a plan for knowledge/curriculum transfer?

📊 Addbacks & Labor Normalization

• Are addbacks supported by documentation (e.g., family labor, personal travel)?
• Have fair market costs for part-time instructors been included?
• Are administrative, curriculum development, or grading roles normalized?
• Is IP/curriculum amortized?

💻 Enrollment Tracking & Systems

• Is enrollment tracked digitally via CRM or class management system?
• Are recurring clients, multi-session packages, or prepaid classes identified?
• Is student churn/retention documented and analyzed?
• Is any software, curriculum, or test IP included in the sale?

🚩 Red Flags

• Owner teaches most or all sessions with no market wage applied
• No seasonal adjustment for cash flow highs and lows
• Curriculum or branding not transferable or documented
• Addbacks include unverified labor, perks, or self-paid ‘marketing’

📌 SBA SOP Tip

Underwriting must reflect seasonality in education revenue, normalize owner-teacher roles, and account for curriculum/IP transferability. Instruction-heavy businesses require clear labor normalization and continuity plans to support fair market value.