SBA Resources · Updated October 2026
SBA Underwriting Benchmarks by Industry
Underwriters kick back projections whose inputs can't be defended. These are the ranges they check yours against.
SBA DSCR floors are universal: under SOP 50 10 8.1, buying a business requires 1.25× business coverage for a first-time buyer, measured on the seller's historical results (1.15× for most other loans, 1:1 on a global basis), and many lenders add a 10% cash-flow stress test. But underwriters judge the cash flow behind the ratio by industry: royalty load, prime cost, USALI norms, collections rates. Every projection input should trace to a documented range below.
Written by Thomas Hartwell, author of the FUNDED series of industry-specific SBA lending guides.
The Thresholds That Apply to Every Industry
| Measure | Standard | Source |
|---|---|---|
| Minimum DSCR, business purchase | 1.25× business for a first-time buyer, on the last full fiscal year or 2-year average; projections can't meet it (1.15× for a same-industry expansion) | SOP 50 10 8.1, Appendix 15 |
| Minimum DSCR, other loans | 1.15× business (projections within 2 years); 1.10× for 7(a) Small loans of $350k or less; 1:1 global | SOP 50 10 8.1 |
| Lender standard | Often around 1.25× global DSCR | Common bank credit policy |
| Stress test | 10% decrease in monthly cash flow | Standard underwriting practice |
| Equity injection | Minimum 10% of total project costs (not waivable for a first-time buyer) | SOP 50 10 8.1, Appendix 15 |
Run your own number in the global DSCR calculator, or read how lenders calculate global DSCR.
Franchise Benchmarks
Typical SBA loan term: 10 years (no real estate) (SOP 50 10 8.1)
| Metric | Defensible range | Source / where to verify |
|---|---|---|
| Royalty | 4 to 8% of gross sales | FDD Item 6 |
| Brand/ad fund | 1 to 4% of gross sales | FDD Item 6 |
| 🔒 + 4 more benchmarks for franchise deals (Ramp to mature volume, SDE multiple (resales), Franchise directory listing, Comfort letter), with defensible ranges and sources, in the Underwrite Yourself kit. | ||
Full deal math + the complete benchmark set for this industry: the FUNDED Franchise guide.
Restaurant Benchmarks
Typical SBA loan term: 10 years (no real estate) (SOP 50 10 8.1)
| Metric | Defensible range | Source / where to verify |
|---|---|---|
| Food & beverage cost | 28 to 35% of sales | Industry norm; above 35% signals a menu pricing problem |
| Labor incl. taxes | 25 to 35% of sales | Prime cost (food + labor) must stay under 65% |
| 🔒 + 3 more benchmarks for restaurant deals (Occupancy, SDE multiple, Transition revenue retention), with defensible ranges and sources, in the Underwrite Yourself kit. | ||
Full deal math + the complete benchmark set for this industry: the FUNDED Restaurant guide.
Hotel Benchmarks
Typical SBA loan term: 10 years on the business portion; real estate portion up to 25 years (SOP 50 10 8.1)
| Metric | Defensible range | Source / where to verify |
|---|---|---|
| Rooms dept expense | 22 to 30% of room revenue | USALI department norms |
| Undistributed operating | 20 to 26% of revenue | USALI |
| 🔒 + 5 more benchmarks for hotel deals (Brand/franchise fees, FF&E reserve, Appraisal basis, Closing costs, ADR / RevPAR), with defensible ranges and sources, in the Underwrite Yourself kit. | ||
Full deal math + the complete benchmark set for this industry: the FUNDED Hotel guide.
Dental Practice Benchmarks
Typical SBA loan term: 10 years (SOP 50 10 8.1)
| Metric | Defensible range | Source / where to verify |
|---|---|---|
| Staff wages | 24 to 30% of collections | Practice norms (excluding owner) |
| Dental supplies | 5 to 7% of collections | Practice norms |
| 🔒 + 4 more benchmarks for dental practice deals (Lab fees, Total overhead, Collections rate, Practice multiple), with defensible ranges and sources, in the Underwrite Yourself kit. | ||
Full deal math + the complete benchmark set for this industry: the FUNDED Dental Practice guide.
Veterinary Practice Benchmarks
Typical SBA loan term: 10 years (SOP 50 10 8.1)
| Metric | Defensible range | Source / where to verify |
|---|---|---|
| Drugs & supplies | 18 to 24% of revenue | Including lab + food resale |
| Staff wages | 25 to 32% of revenue | Excluding owner-DVM |
| 🔒 + 3 more benchmarks for veterinary practice deals (Occupancy, EBITDA margin (well-run), Practice multiple), with defensible ranges and sources, in the Underwrite Yourself kit. | ||
Full deal math + the complete benchmark set for this industry: the FUNDED Veterinary Practice guide.
Where These Numbers Come From
These ranges are compiled from the sources underwriters themselves use, FDD Items 6 and 19, USALI department norms, BizBuySell comparables, practice-management norms, and are the same benchmark set used throughout the FUNDED series. Program facts (loan terms, DSCR floors, injection minimums) are verified against the current SBA SOP 50 10 8.1 (effective October 1, 2026), 13 CFR Part 120, and the latest SBA notices.
Ranges are norms, not rules: a number outside a range isn't automatically wrong, but expect to defend it with a document. Lenders require written assumptions, note the source for every projection input.
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Frequently Asked Questions
What DSCR do SBA lenders require by industry?
The SBA floors are the same in every industry. Under SOP 50 10 8.1, buying a business requires 1.25:1 business DSCR for a first-time buyer (1.15:1 for a same-industry expansion), measured on the seller's last full fiscal year or 2-year average, not projections; most other loans need 1.15:1; the global floor is 1:1. Many lenders also run a 10% cash-flow stress test. What changes by industry is how the cash flow is built and challenged: royalty loads for franchises, prime cost for restaurants, RevPAR with occupancy for hotels, collections rates for dental and veterinary practices.
Why do underwriters kick back projections?
Because the inputs can't be defended. Every assumption in a projection should trace to a documented range, an FDD item, a POS report, an STR report, a practice management report, or an industry norm. Projections whose margins sit outside defensible ranges get repriced or declined, so write your assumptions down with sources.
GOING DEEPER
Where does your deal land?
You have the rules. The Global DSCR Tool runs it on your actual deal, for your industry, and tells you what to do about the answer. Six inputs, already filled in, verdict at the top.
See the Global DSCR Tool, $27Or browse all the tools. The calculators stay free.