💼 A service company showed $480K in free cash flow—but had deferred equipment replacements for 3 years. When we normalized CapEx to $90K/year?⚠️ True FCF = $390K📉 Value dropped 20%—and the lender avoided a post-closing cash crunch. Cash flow without reinvestment isn’t sustainable. It’s short-term optimism.

🧯 Deadly Sin: Ignoring Capital Expenditures A business that looks cash-rich today might fall apart tomorrow if it’s not reinvesting. CapEx needs are often: 🔧 Buried in “repairs and maintenance”📉 Ignored in cash flow estimates📉 Excluded from projections 📌 SBA-compliant valuations must deduct reasonable ongoing CapEx to calculate real free cash flow. Otherwise, you're lending … Continue reading 🧠 Sin Spotlight: CapEx Gets Ignored Too Often

📘 We’ve built a Goodwill Evaluation Guide for SBA lenders. Inside: ✅ Definitions ✅ Transferability checklist✅ Real-world examples by industry✅ Tips for credit memos 📩 Click here to grab your copy.

We reviewed a $1.4M valuation for a solo dental practice. Cash flow looked great… but: No associate No buyer in place 90% of patients came to see the doctor, not the brand We applied a personal goodwill risk premium. Value adjusted. Structure changed. Deal closed—but safely. 📌 If the business is built on a name, … Continue reading 📊 Case Study: Doctor-Owned Practice

🧯 Deadly Sin: Overvaluing Personal Goodwill If the business relies on the seller’s relationships, charisma, or technical expertise—it may not transfer. And if the valuation assumes those intangibles stick around, the lender’s at risk. ✅ Enterprise goodwill = transferable🚫 Personal goodwill = fragile 📌 If the cash flow walks out the door with the owner, … Continue reading 🧠 Sin Spotlight: Goodwill That’s Too Personal

📘 New lender tool: Our Rent Normalization Memo Template Includes: ✅ What “market rent” means ✅ Where to find rent comps✅ How to adjust cash flow✅ Sample memo language for credit files 📩 Click here to grab your copy.

A $1.8M valuation looked solid—until we saw the seller was charging their business just $1,000/month for a property worth $4,500/month in rent. ⚠️ That $3,500/month gap = $42K/year = ~$250K in overstated value We adjusted the rent. Value dropped. The loan structure changed—and the deal stayed alive. 📌 Always ask: Is the rent realistic post-sale?

🧯 Deadly Sin: Misaligned Rent in Biz + Real Estate Deals When the seller owns both the business and the building, the rent may be: 🏷️ Below market (to reduce tax liability)💸 Above market (to inflate building income)❌ Not normalized in the valuation If the appraisal uses the wrong rent, the cash flow—and business value—are … Continue reading 🧠 Sin Spotlight: Rent Isn’t Always Market-Based

📊 Our Working Capital Evaluation Worksheet helps SBA lenders assess WC adequacy in valuations. Includes: ✅ Key WC components✅ Red flag indicators✅ Questions to ask borrowers and appraisers 📩 Click here to grab your copy.