u/nateacquio

I am looking at a listing where the broker put the financing structure right in the ad. Roughly 60% bank loan, 20% seller note, 20% down. I had not even asked about seller financing yet.

Part of me reads that as a good sign. The seller is willing to stay financially tied to the business after close, which is the classic put-your-money-where-your-mouth-is signal. This one also claims all numbers come from signed tax returns, which fits the same pattern of a seller trying to look verifiable up front.

The other part of me reads it as a pricing tell. If the deal cleared a bank's debt-service math cleanly at the ask, would the seller need to advertise a note at all? Baking the note into the listing feels like it could be the broker admitting the ask only works with the seller subsidizing the financing.

And then there is the fine print I know I do not fully understand yet:

* Whether the note is on full standby or amortizing from day one, which completely changes the debt math

* Whether the rate and term are set, or just bait to get calls

* What happens to the note if the business misses a covenant or the seller's numbers turn out soft

* Whether banks actually treat the note as equity-like cushion or just more debt

For people who have closed with seller paper: did the note being offered up front (vs negotiated late) tell you anything real about the deal? And has anyone seen a standby note save a deal the bank math otherwise killed?

There has been a ton of noise this week about the SBA doubling its limit to $10M on July 4, and most of what I am seeing treats it like every Main Street deal just got twice the financing headroom. I do not think that is right, and I want to check my read.

From what I can tell, the individual 7(a) loan is still capped at $5M. What actually changed is that you can now stack a 7(a) and a 504 up to $10M combined. The catch is what a 504 is allowed to pay for. That money is for fixed assets, real estate and long-term equipment. It cannot fund goodwill, working capital, or inventory.

But most of the deals I look at on here are goodwill heavy. A service business, no building, not much equipment. So if I am buying a $6M HVAC or landscaping business that does not come with real estate, my acquisition financing still looks capped around the $5M 7(a) line, not $10M.

Where it does seem to matter is deals that come with a building or a yard of equipment. Manufacturing, self-storage, anything that owns its facility. There you could put the real estate on the 504 and the business on the 7(a) and actually use the higher combined number.

So for people who have actually closed SBA deals: am I underrating this? Are there structures where the $10M combined cap helps a goodwill-heavy acquisition with no real estate? Or is the honest answer that for most of what gets posted here, the binding constraint is still the $5M 7(a) limit, and this mostly helps owner-operators who are buying their building?

I got this pushback on my recent screening posts: stop treating SDE like cash flow until you know who actually runs the business.

That hit.

A listing can look cheap at 2-3x SDE and still be a bad deal if the owner is doing sales, managing employees, holding referral relationships, and quietly covering working-capital gaps.

So before I care too much about the CIM, I'm trying to separate two things:

- transferable business

- expensive owner-operator job

For people who have bought or diligenced these: what's the fastest tell from a listing or broker call that the "business" is really just the owner?

I spent part of this week going through 10 listings in NY/NJ/CT, mostly service businesses and a couple light manufacturing ones.

My rough count: 5 were worth modeling, and 3 actually cleared my first-pass cash-flow screen.

The others were not always bad businesses. A lot of them just had one of the usual problems: no cushion after debt, vague SDE, too much owner dependence, possible customer concentration, capex questions, or not enough detail in the public listing to know whether the numbers mean anything.

Before you request the CIM or sign the NDA, what makes you immediately pass?

And what risks do you ignore at the listing stage because they can only be answered later?

I am trying to calibrate this before I waste brokers' time or my own.

I keep seeing listings where the headline multiple does not look insane, but a quick debt-service pass makes the asking price hard to justify. Not "this is a little tight." More like the deal only works if the price is meaningfully lower or the seller carries a lot more paper.

For people who have bought, brokered, or financed SMB deals: do brokers take that conversation seriously, or does it just make you sound like every other spreadsheet buyer?

Have you seen deals close 20-30% below the original ask because the debt math did not work?

I have been looking at a Queens restoration franchise listing and I keep going back and forth on it.

Public listing says about $3.16M revenue, $639k SDE, and a $1.5M asking price. So roughly 2.35x SDE. It is water/fire/mold cleanup, cleaning, and some roofing/tarping work.

On the surface, the math looks better than most listings I have seen. If I assume a normal SBA-style structure with some seller financing, debt service doesn’t look crazy. There should still be cash left for the buyer.

That is the part that makes me nervous. If the headline numbers are close to real, why has it apparently been sitting since late 2025?

The things I would want to prove out before taking it seriously:

- what franchise royalties, ad fund, and transfer requirements do to cash flow

- how much revenue depends on the current owner's relationships

- whether restoration revenue is just lumpier than the listing makes it look

- why another buyer has not already moved on it

For anyone who has bought or diligenced a restoration franchise or similar service business, what would you try to disprove first?

Am I missing an obvious reason a deal like this sits?