$19 · Instant download · Verified vs SOP 50 10 8
The most you can pay, before the deal stops working
A seller names a price. This tells you the most you can pay and still have the deal carry its own debt and pay you a salary. Past that number, walk.
Price is an output, not an input: the most you can pay is set by what the business earns, not by what the seller wants. Take cash flow, subtract what you must pay yourself, divide by the coverage ratio you are underwriting to, and that is the annual debt service the deal supports. Work backward through the payment to the loan, gross up for your injection, and you have your ceiling. This tool runs that chain and puts your number next to the ask.
Built to answer in under a minute. Six inputs at most, already filled in with typical numbers for your industry, and the verdict sits at the top in plain words. The supporting math is underneath if you want to check it, and you never have to open it if you do not.
What it computes
- ✓ What is left for debt after you pay yourself a real salary
- ✓ The most annual debt service the deal supports at the coverage ratio you choose
- ✓ The largest loan that payment carries at your rate and term
- ✓ Your walk-away price, and the cash you would need at it
- ✓ That price as a multiple of cash flow, as a sanity check
- ✓ Your number against the asking price, with the gap in dollars and what to do about it
1. Choose your industry
2. Get it
Get the calculator, $19Excel file, instant download after checkout. Formulas open so you can see and defend every number.
Need more than this one answer? The full Will the SBA Fund This Deal kit is $67 right now, normally $97, and includes all of these plus the five-year projections and the lender-ready package. Three separate tools already cost more than that, so if you are weighing three or more, start there instead.
Not ready to purchase?
The free calculators cover the individual pieces: payment, down payment, and guaranty fee. This tool exists because the free version does not let you set your own coverage target, your own salary, or compare against the ask.
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Frequently Asked Questions
How much should you pay for a business?
No more than the price its cash flow can service after paying you. Subtract your salary from cash flow, divide by your target coverage ratio, and that is the annual debt service the deal supports.
What is a walk-away price?
The highest price at which a deal still covers its debt and pays the owner. Above it the business cannot service the loan, no matter how good it looks.
What multiple of cash flow do SBA lenders accept?
There is no fixed SBA limit, but above roughly four times cash flow the debt becomes hard to service and lenders will look for real growth to justify it.
Written by Thomas Hartwell, author of the FUNDED series of industry-specific SBA lending guides.