Underwrite a Deal
The Target
Verdict
- WatchIndustry charges off at 4.38% against 3.51% across all industries
SBA acquisition loans in this industry fail more often than average. Not a veto, but underwrite the downside case seriously.
- WatchOwnership or licensing is restricted here
Most states require a licensed qualifier to hold the contractor license the business operates under.
- GoodDSCR after your salary is 1.72
Above the 1.25 rule of thumb.
- GoodAsking 3.8x, inside the cited band
Priced where this industry trades.
The Number That Should Set Your Offer
At $400,000 of SDE, a $100,000 owner salary, $200,000 of cash, and a 10% seller note, the most this business can carry at a 1.25 DSCR is $1,976,482. The ask sits $476,482 under it.
Structure
- Equity (your cash)
- $200,000
- Seller note
- $150,000
- 7(a) loan
- $1,150,000
- Annual debt service
- $174,813
- DSCR
- 1.72
- Implied multiple
- 3.75x
- Cited band
- 2x–4x SDE
Context
- Deals financed (FY2020 through FY2025)
- 707
- Industry median loan
- $735,000
- Industry charge-off
- 4.38% (all: 3.51%)
- State median loan
- –
- State FY2025 loans
- –
The median is a loan, not a price: equity and seller notes sit on top. Charge-off rates come from the seasoned cohort only; FY2020+ loans are too young to have defaulted. Rates are a lower bound (open loans can still fail), so read the ordering, not the level.
Licensing: Employ or retain a qualifying license holder; buyer licensure timelines vary by state.