“Will this deal finance?” is the question under the whole search, and most of the answer can be ready months before you need a lender. Half of financeable is the business. The other half is you.
Build the buyer file first. Four documents, all yours to control: a current personal financial statement, your credit report (pull it now and fix issues before underwriting finds them), a resume rewritten as a management plan for the kind of business you are buying, and a one-page source-of-funds summary for your equity injection. A buyer who produces this file on request moves weeks faster and reads as credible to every broker and seller in the process.
Learn the coverage math and run it on every target. Lenders live on one ratio: debt service coverage, the business’s cash flow divided by the annual loan payment. Many SBA lenders want to see roughly 1.25x or better. An illustrative example: a business earning $600,000 in adjusted EBITDA, bought for $2.4M with 90% financed over 10 years, carries annual debt service in the neighborhood of $290,000. Coverage is about 2.0x, comfortable. Run the same math on a $900,000-EBITDA asking price of $4.5M with a thin injection and watch the room disappear. Ten minutes of this math per target saves months of pursuing deals that were never going to finance at the ask.
Settle the structure questions early. A typical SBA purchase stacks three pieces: the loan (often 70 to 80 percent), your equity injection (SBA rules commonly require at least 10 percent, and lenders will verify where it comes from), and frequently a seller note bridging the rest. Two conversations to have before you are at an LOI: with yourself about the injection number you can truly commit, and with sellers about a note, early and matter-of-factly, because a seller note is often the difference between financed and stalled, and sellers take the conversation better from a prepared buyer than a desperate one.
And the one nobody prepares for: the personal guarantee. SBA financing means you sign personally. Understand it, and have the conversation at home before a closing table makes it urgent.
Full members track all of this in the command center: the capital stack laid out and a readiness checklist that shows where you stand before anyone asks. Join Five Experts free and start preparing before the search gets serious.
