Underwriting
What a Lender-Ready SBA Loan Request Looks Like
A lender-ready request answers the underwriter's questions before they're asked. It's organized around what the lender has to write in its credit memo, and it shows the math instead of describing it.
Key facts
- Organize the request around what the lender must document: the business, the people, the cash flow, the equity, the collateral and the risks.
- Lead with a one-page summary: what you're buying, for how much, how it's paid for, and why it works.
- Show sources and uses that balance to the dollar, including closing costs and working capital.
- Every add-back needs a document behind it. Unsupported adjustments don't count toward coverage.
- Name the risks yourself, with what you'll do about each. It builds more confidence than leaving them for the underwriter to find.
Written for larger, structured projects: acquisitions, owner-occupied real estate and expansion. For quick capital or small short-term needs, your local SBDC or a nonprofit lender is usually a better first call.
Write it for the person who has to say yes
Your request is read by an analyst who has to turn it into a credit memorandum, and by approvers who read the memo. For an SBA acquisition, the SOP lists what that memo must cover: the business and its history, your experience and how the business will be managed day to day, the financial analysis, working capital, collateral, insurance and the reasons to approve. A request organized the same way saves the analyst time and leaves fewer gaps to fill with assumptions.
Our sample package shows what this looks like for a hypothetical deal. Here are the parts, in the order a lender reads them.
1. A one-page summary
- What: the business, its industry, location and size.
- The deal: price, what’s included (assets or stock, real estate or not), target closing date.
- The ask: loan amount, purpose, and any other financing (seller note, line of credit).
- Why it works: the coverage after the deal, your cash in, your relevant experience.
- The main risk and how you’ll handle it.
If an approver read only this page, they should understand the deal.
2. Sources and uses
A table of every dollar the project needs and where each comes from. Uses include the price, closing costs, financing fees, the valuation and other diligence costs, working capital and any real estate. Sources include the SBA loan, your equity, any seller note (marked standby or paying) and any line of credit. It must balance. See sources and uses and run it in the acquisition calculator.
3. The business and its numbers
- Three years of the target’s tax returns and financial statements, plus year-to-date interim statements and the same period last year.
- A spread: those years side by side, with revenue, gross margin, operating expenses, EBITDA and net income.
- An explanation of any big change: a lost customer, a price increase, a one-time project.
- Customer concentration, supplier concentration and seasonality, if relevant.
4. Add-backs, each with support
List each adjustment to the seller’s earnings, the amount, why it won’t recur under your ownership, and the document that proves it: the invoice for the one-time repair, the payroll record for the family member who’s leaving. Then show the deductions too: a market salary for you, and capital spending the business must fund. Lenders must justify every adjustment, and ones without support don’t count. See add-backs.
5. Cash flow and coverage, business and global
Show the math, step by step: adjusted cash flow, total debt service after the deal (the new loan, any paying seller note, other business debt), and the coverage ratio. Then a global view: your household income, personal debts and living costs. The method is in how lenders calculate cash flow.
6. Your equity and where it comes from
The amount, the source, and the paper trail: bank or brokerage statements, gift letters, documentation of any loan against other assets. Equity that can’t be traced creates delays. See equity injection and seller notes.
7. You and your team
A résumé focused on what’s relevant: management, industry experience, P&L responsibility. Who will run the business day to day, who’s staying from the current team, and the plan for the seller’s transition within SBA limits (see the seller transition period). Include an ownership chart showing every direct and indirect owner; the lender has to record 100% of ownership.
8. Projections, with assumptions
A two- or three-year projection, with the assumptions written out: revenue drivers, cost changes, staffing, capital spending. Keep it grounded; lenders review projections but don’t use them to meet the coverage requirement for a purchase.
9. Collateral and personal financial information
A list of business assets with values, and your personal financial statement. See personal financial statement. If business assets won’t fully secure the loan, be ready to discuss other collateral, including personal real estate.
10. Transaction documents
The signed LOI, the draft purchase agreement, the lease and landlord’s position on assignment, franchise documents if any, and the status of licenses that must transfer.
11. Risks and mitigants
Two to five real risks, each with what you’ll do about it. For example: “Top customer is a large share of revenue; the seller will introduce me personally during the transition, and the customer has renewed annually for many years.”
Hypothetical example
Summary page for an invented deal:
- Business: commercial landscaping company, founded in 2004, two locations.
- Deal: 100% asset purchase for $2,100,000; closing targeted after the slow season.
- Ask: SBA 7(a) loan of $1,980,000; buyer equity $240,000; seller note on full standby $100,000. Total project $2,320,000 (price, $70,000 closing and diligence costs, $150,000 working capital).
- Why it works: adjusted cash flow of $520,000 against post-deal debt service of $330,000 (about 1.58x); global coverage about 1.30x; buyer ran operations for a larger landscaping firm.
- Main risk: seasonality. Mitigants: working capital in the project and a line of credit for the winter months.
Sources: $1,980,000 + $240,000 + $100,000 = $2,320,000. Uses: $2,100,000 + $70,000 + $150,000 = $2,320,000. All figures are invented.
Before you send it
- Does every number tie to a source document and to every other place it appears?
- Would someone who has never met you understand the deal from page one?
- Have you named the risks before the lender does?
The next step after a request is underwriting; see the SBA underwriting process. If you’d like help turning your deal into a request like this, tell us about it. We never charge you; see how we get paid.
Common questions
Do I need a full business plan for an SBA acquisition loan?
You need the substance of one: who you are, what you're buying, how you'll run it, and why the numbers work. A focused loan request with a short narrative, clear financials and documented assumptions usually serves better than a long, generic plan.
Should I include projections?
Yes, with assumptions. Lenders review them, but for a purchase the coverage requirement is met on historical results, so projections support your story rather than size the loan.
Who should prepare the request?
You can, and you know the deal best. Some buyers use an accountant or advisor for the financial sections. Whatever you use, you're responsible for its accuracy, and you'll need to explain it in your own words.
What's the biggest mistake in loan requests?
Numbers that don't tie: a price in the summary that differs from the LOI, sources and uses that don't balance, or a cash-flow figure that can't be traced back to the tax returns. Underwriters stop trusting the rest of the file when that happens.
Tell us what you're trying to do
No pressure, and we don't pull your credit to start. Describe your plan in your own words and we'll give you an honest read on what fits, what doesn't, and what your other options are — including ones that aren't an SBA loan.
General information, not legal, tax or financial advice. Precise SBA is not affiliated with the U.S. Small Business Administration. SBA rules and lender policies change; all financing is subject to lender underwriting and SBA program rules, and nothing here is an offer or commitment to lend. Examples use hypothetical numbers. We never charge you. If a loan closes, the lender may pay us a referral fee, disclosed on SBA Form 159 (how we get paid).