Buy-Side · Financing
SBA DSCR stress-testing.
A deal that looks financeable on the broker's numbers can fall apart the moment a lender recasts the earnings and models real debt service. We run that analysis first, so you know whether an acquisition clears SBA coverage before you commit to it.
The problem
Coverage is where profitable-looking deals fail
SBA acquisition lending turns on debt-service coverage, the ratio of the cash a business actually generates to the debt payments the buyer will owe. The number a broker presents rarely survives contact with how a lender computes it. Owner add-backs get stripped, the cost of replacing the seller’s labor gets added, and the coverage that looked comfortable narrows or disappears. Finding that out during underwriting, after you have signed an LOI and started paying for diligence, is the expensive way to learn it. We move the coverage analysis to before the offer.
What's included
What the analysis covers
✓Earnings recast from broker-presented figures to a lender-defensible basis
✓Replacement-management cost applied where the buyer will not perform the owner's role
✓Debt-service modeling against the SBA change-of-ownership coverage standard
✓Global coverage considerations beyond the business itself
✓Seller-note and standby treatment in the coverage calculation
✓Sensitivity analysis across coverage ratios and interest-rate scenarios
✓The maximum supportable debt service and implied purchase-price ceiling
✓A written read you can take to your lender before you make an offer
How it works
From broker P&L to a coverage verdict
01
Send the deal
The listing, the broker P&L, and any financials you have. No formatting needed.
02
We recast the earnings
We rebuild the earnings to a basis a lender will accept, including the cost of replacing the owner's role where it applies.
03
We model the coverage
We test debt service against the SBA acquisition coverage standard and run the sensitivities that show where the deal breaks.
04
You get a coverage read
A clear answer on whether the deal clears coverage, the maximum debt it supports, and the price ceiling that follows, before you sign anything.
Who it's for
Built for SBA acquisition buyers
Self-funded searchers, independent sponsors, and first-time buyers pursuing SBA-financed acquisitions who want to know whether a deal clears coverage before they commit. If you are working from a broker’s earnings figure and want to see the deal the way a lender will, this is the analysis.
Questions
Common questions
What coverage ratio does the SBA require for an acquisition?
Acquisition financing falls under the SBA's change-of-ownership standard, which carries its own coverage requirement distinct from the general 7(a) threshold. The specific ratio and how it is measured are set in the current SBA SOP, and the acquisition standard is the one that applies to a business purchase. We verify the applicable figure against the SOP in effect for your deal's timing.
Why does replacement salary matter to coverage?
If the buyer will not perform the seller's day-to-day operating role, the business has to pay someone who will. That cost reduces the cash available for debt service. A coverage figure built on the seller's discretionary earnings, without accounting for who does the owner's job, can materially overstate what the deal actually supports.
Is this the same as getting approved by a lender?
No. This is analysis to tell you whether a deal is likely to clear coverage before you take it to a lender, and what to address if it is tight. Actual approval is the lender's decision. The analysis is built to make that conversation faster and better prepared.
Can you tell me the most I can pay for a deal?
Yes. Working backward from supportable coverage gives a maximum debt service, an implied loan size, and a purchase-price ceiling for the deal to remain financeable. That ceiling, alongside your equity, is often the most useful single output of the analysis.
Wondering if a deal clears coverage?
A confidential call is the fastest way to see the deal the way a lender will.
Schedule a Confidential CallNexTax Advisory provides financial and tax advisory services. It does not provide legal services or formal audit or attest engagements. Analysis is intended to inform your decisions alongside your attorney, lender, and independent quality-of-earnings provider, not to replace them.