A quick guide for SBA lenders to distinguish between accounting-based book value and economic fair market value in business valuations. Definitions Book Value: The net value of fixed assets shown on the balance sheet (Assets – Accumulated Depreciation), based on accounting rules. Fair Market Value (FMV): The estimated amount, expressed in terms of money, that … Continue reading Book Value vs. Fair Market Value (FMV) Cheat Sheet

Use this tool to assess whether free cash flow adjustments (addbacks) are legitimate, recurring, and SBA-compliant. What Is an Addback? An addback is an adjustment to earnings that removes non-recurring, discretionary, or owner-specific expenses to arrive at normalized free cash flow. Legitimate Addbacks Include Excess officer compensation Personal vehicle or travel expenses One-time legal or … Continue reading Addback Risk Review Tool

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? 🧑‍🏫 … Continue reading Test Prep & Tutoring Center Checklist

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 … Continue reading Specialty Retail Store Checklist

Use this checklist to assess businesses in this industry for SBA 7(a) lending and underwriting. Owner Role + Licensing Review Is the owner the licensed roofer, estimator, or project manager? Has labor been normalized with market-rate wages for replacement? Are licensing and bonding requirements transferable? Is the business reliant on the owner's personal sales or … Continue reading Roofing Contractor Checklist

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 … Continue reading Restaurant Checklist

Use this checklist to assess businesses in this industry for SBA 7(a) lending and underwriting. Owner Dependency + Labor Normalization Is the owner cleaning homes or coordinating client schedules? Have fair market wages been applied for administrative or cleaning duties? Are staff paid legally as W-2 or misclassified as 1099? Is the workforce stable or … Continue reading Residential Cleaning & Maid Services Checklist

Use this checklist to assess businesses in this industry for SBA 7(a) lending and underwriting. 👨‍🍳 Owner Involvement & Labor Normalization Is the owner acting as GM or floating between locations? Has a fair market wage been applied for owner oversight and labor? Are GMs or salaried managers in place at each location? Is staffing … Continue reading Multi-Unit Fast Food Franchise Checklist

Use this checklist to assess businesses in this industry for SBA 7(a) lending and underwriting. Owner Dependency & Relationship Risk Is the owner the primary contact for clients or HOAs? Are key relationships institutionalized or personal? Can accounts transfer without owner involvement? Have hours and duties been normalized in cash flow? Client Contracts & Retention … Continue reading Property Management Checklist

Use this checklist to assess businesses in this industry for SBA 7(a) lending and underwriting. Owner Role + Labor Structure Does the owner manage growing, retail, and event functions? Are farm staff or retail employees in place? Has labor been normalized for market roles? Is the business reliant on owner horticultural skill? Revenue + Seasonality … Continue reading Urban Farm & Garden Retail Checklist