Use this guide to assess the underwriting impact of customer concentration in SBA business acquisition deals. Why It Matters High customer concentration = higher revenue risk if a key client leaves. Reduces business transferability and stable earnings. May require valuation discounts or loan structuring changes. Review Questions Does one customer account for >25% of revenue? … Continue reading Customer Concentration Discount Guide

In business valuations—especially those conducted for SBA 7(a) loan purposes or during transactions—confusion often arises when changes in capital structure affect the valuation results. This confusion intensifies when a deal changes from an asset purchase to a stock purchase. Bankers and clients alike may ask, “Why does the value change if the business hasn’t changed?”To … Continue reading Understanding Capital Structure’s Impact on Business Valuation: A Guide for Bankers

Use this worksheet to evaluate whether capital expenditures (CapEx) have been properly accounted for in free cash flow estimates. Step 1: Identify CapEx Drivers Is the business equipment-heavy? Are assets aging or near replacement? Are there deferred upgrades or repairs? Is CapEx needed to maintain revenue (not just growth)? Step 2: Normalize CapEx Review historical … Continue reading CapEx Adjustment Worksheet

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