Small Business Acquisition Calculator

Can I afford to buy this business?

Enter the listing's asking price and SDE, then your financing: down payment, bank or SBA loan, seller note. The page shows the debt service coverage ratio, the cash you need at closing, what the business pays you after the loan, the highest price that still clears the lender's floor and how fast the deal breaks if earnings fall.

A planning tool for buyers and the advisers who help them. It does not value the business and does not know any lender's rules. Not financial advice.

1. The deal

Asking price

Seller's discretionary earnings (SDE), per year

Salary you must pay yourself (or a manager), per year

Capex and equipment reserve, per year

Your cash down payment, % of price

Seller note, % of price

Bank / SBA loan rate, % per year

Bank / SBA loan term, years

Seller note rate, % per year

Seller note term, years

Closing costs and loan fees, % of price (paid in cash)

Working capital you must hold back, $

Lender DSCR floor

Seller note is on full standby (leave its payments out of DSCR)

Change the numbers, then click Calculate. The starting values are a made-up example.

How it works, and what it leaves out

DSCR: (SDE minus your salary minus the capex reserve) divided by a year of loan payments. With the standby box ticked, the seller note is left out of the payments.
Payments: level monthly payments, compounded monthly, on the bank loan (price minus down payment minus seller note) and on the seller note.
Cash at close: down payment plus closing costs and loan fees you enter, plus the working capital you want on hand. Loan fees are not modelled; type your lender's figure into the closing cost box.
Maximum price: the price that puts DSCR exactly on your floor if the percentages down, seller-financed and bank-financed stay the same.
Model reviewed: 2026-10-06, by the author. Arithmetic is tested; lender practice was not checked with a lender.
Not decided: whether the SDE is real (add-backs, owner-specific revenue, customer concentration), whether the price is fair, lender-specific equity-injection and collateral rules, personal guarantees, taxes on the business's income, earn-outs, inventory and real estate carved out of the price, and growth. Have an accountant look at the books before you sign anything.

Common questions

What is DSCR and why do lenders want 1.25?

Debt service coverage ratio is the cash flow available to pay debt divided by the year's loan payments. A ratio of 1.25 means the business earns $1.25 for every $1.00 of payments, a cushion for a bad year. SBA-backed acquisition lenders commonly look for about 1.25 or more, but each lender sets its own floor and its own definition of cash flow.

What is SDE and is it the same as EBITDA?

Seller's discretionary earnings is pre-tax profit with one owner's pay, one-time costs and personal expenses added back. It is the usual earnings measure for owner-operated businesses brokers list for sale. EBITDA is used for larger companies and does not add back an owner's salary. Whatever figure the broker gives you, check the add-backs before trusting it.

Why does the page subtract my salary before computing DSCR?

SDE already includes the pay of one working owner. A lender will want to see that the business can pay a person to run it and still cover the loan, so this page takes your replacement salary and a capex reserve off SDE before dividing by debt service. Change the salary to see how sensitive the ratio is.

What is a seller note on full standby?

The seller finances part of the price but receives no payments for some period, usually while the bank loan is outstanding. Lenders often leave a standby note out of the DSCR. The box on this page does that, and still counts the note in your cash flow after debt, because you owe it eventually.

How much cash do I need to buy a business with an SBA loan?

The down payment (commonly at least 10% of the price), closing costs and loan fees, and working capital so the first payroll is not paid out of the loan. The page adds these up. Lenders' equity rules and fees change, so confirm them with a lender.

Is my deal data uploaded anywhere?

No. The numbers stay in your browser and nothing is sent; a test in the code asserts there are no network calls.