📘 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.

📉 A business showed $250K in free cash flow—but no AR, no inventory, no AP transferred in the deal. The buyer would have had to inject ~$180K in operating cash just to open the doors. We adjusted for working capital deficiency. Deal restructured. Crisis avoided. Earnings without operations = nothing.

🧯 Deadly Sin: Ignoring Working Capital Too many appraisals focus only on earnings—and forget to analyze what’s being delivered. Working capital = the fuel that keeps the business running. If the seller walks with all the receivables and payables?The buyer might be walking into a cash trap. 📌 SBA valuations must consider working capital structure—and … Continue reading 🧠 Sin Spotlight: Working Capital Ignored

📘 We created an Owner Comp Normalization Guide with benchmarks and red flag scenarios. It includes: ✅ Where to find comp data✅ How to normalize for passive vs. active owners✅ Valuation report examples✅ A checklist for appraisers and underwriters Click here to grab your copy.

💼 A seller was taking a $30K draw and claiming $180K in “cash flow.” But they were the full-time operator—sales, ops, admin, everything. Market comp for a GM in that role: $105K Real free cash flow: ~$75KReal value: about 60% of the asking price. Lesson: If you don’t normalize the salary, you’re not valuing a … Continue reading 📊 Case Study: Overstated Cash Flow via Owner Draw

🧯 Deadly Sin: Not Adjusting Owner Compensation If the valuation doesn’t reflect what the buyer would have to pay competent management, it’s wrong. We adjust to: Market-based replacement salary Industry comp data Buyer skill set, not seller tax strategy 📌 If an owner pays themselves $20K but would need to hire a GM at $95K, … Continue reading 🧠 Sin Spotlight: Owner Salary Missed

📘 New for SBA lenders:Our Rules of Thumb Red Flag Guide highlights the valuation shortcuts that don’t hold up in underwriting. Inside: ✅ When rules of thumb work🚫 When they’re dangerous📉 How to spot unjustified multiples📝 A checklist for reviewing rule-based appraisals 📩 Want the 1-page guide? Click here.