Free Tool

Does this deal actually work?

Model your SBA 7(a) loan, seller note, DSCR, and cash flow in minutes. Know if the numbers work before you spend another hour on it.

SBA 7(a) Amortization Seller Note DSCR Cash Flow Waterfall EBITDA Multiple SMB Acquisition

Real estate in this deal? Try the real estate acquisition calculator →

Deal Inputs

Deal Basics
$
Optional — for reinvestment guidance
$
Seller's Discretionary Earnings
$
Your replacement salary
$
Annual distributions, capex reserve, etc.
$
Capital Stack
Your down payment
$
Seller financing amount
$
Loan Terms
10-year term assumed
%
5-year term assumed
%
🧮

Enter your deal inputs

Fill in the numbers on the left and click Calculate to see your DSCR, debt service, cash flow, and EBITDA multiple.

The Searcher's Guide

What these numbers actually mean for your deal

What is DSCR and why does it matter?

Debt Service Coverage Ratio (DSCR) is the single most important number your SBA lender will look at. It measures whether the business generates enough cash flow to cover its debt payments — with room to spare.

DSCR = Net Operating Income ÷ Total Annual Debt Service
A DSCR of 1.25x means the business generates $1.25 for every $1.00 of debt service. Per SBA SOP 50 10 8, the SBA minimum is 1.15x — but most lenders set their own policy minimum at 1.25x, and lenders typically get comfortable at 1.35x or higher. This calculator uses 1.25x as the threshold, consistent with most lender requirements.

How SBA loan amortization works

SBA 7(a) loans for business acquisitions typically use a 10-year term. The interest rate is variable, tied to the Prime Rate plus a spread. As of mid-2026, rates are running approximately 9.5–10.5% depending on deal size and lender. This calculator uses a fixed 10-year amortization at your specified rate.

What is a seller note?

A seller note is financing provided directly by the business seller — they essentially loan you part of the purchase price, which you repay over time with interest. Seller notes are common in SMB acquisitions and can make deals work that wouldn't otherwise clear DSCR thresholds. Most SBA lenders require seller notes to be on full or partial standby for the first 24 months.

EBITDA multiple — is the price fair?

The EBITDA multiple (Asking Price ÷ EBITDA) tells you how many years of earnings you're paying for the business. For Main Street SMB deals under $5M, multiples typically range from 2.5x to 4.5x depending on industry, growth trend, and business quality. Above 5x for a sub-$2M deal deserves serious scrutiny.

Rule of thumb: If the deal doesn't clear 1.25x DSCR after owner salary, it doesn't work at that price. Either the asking price needs to come down, the structure needs to change, or you need to pass.

What this calculator doesn't include

This free tool models the base capital stack scenario. It doesn't account for working capital needs, equipment replacement reserves, industry-specific risk adjustments, or lender-specific underwriting overlays. For a complete lender-grade analysis — including what your SBA lender will actually see — use DealEconomics.

Go Deeper

This is one scenario. Your deal deserves the full picture.

Three scenarios, lender-grade DSCR analysis, CIM PDF analysis, risk flags, due diligence tracking, and contextual AI deal analysis — all in one place.

Three scenario modeling Lender Analysis (DSCR) Share Deal Room with your deal team CIM PDF Analysis Risk Flags AI Deal Summary Due Diligence Tracking Walk into every advisor meeting prepared
Start Free, No Card Required →

Free on Single-Deal · No credit card required · Upgrade to Portfolio anytime