Use these short callouts as quick reminders or margin notes to help identify key risks and reinforce SBA lending best practices.

Lender Insight #1

Analyze a 3-year break-even analysis and working capital needs under downside scenarios. This helps evaluate business feasibility and funding sufficiency.

Lender Insight #2

If only one valuation method is used in the independent appraisal, make sure the appraiser explains why others were excluded.

Lender Insight #3

Confirm that free cash flow to the firm is calculated *after* owner compensation, capital expenditures, and working capital changes. Free cash flow to equity is calculated *after* debt service, owner compensation, capital expenditures, and working capital changes.

Lender Insight #4

When projections drive purchase price, ask for a sensitivity analysis to understand risk under low/reduced growth cases.

Lender Insight #5

Check that the discount rate is consistent with the type of income stream—equity or enterprise.

Lender Insight #6

If market comps are used, ensure details about the source, selection, and comparability are included. Comps should never substitute for cash flow-based logic.

Lender Insight #7

Ensure the valuation includes a clear Statement of Assumptions and Limiting Conditions. Without it, the report lacks essential context and legal clarity.

Lender Insight #8

Compare company performance and buyer projections against industry benchmarks and/or ratios as a reasonableness check.

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These insights can be embedded in credit memos, internal checklists or training materials for quick reference.