How the buyer's bank reviews your business

The short version

• If your buyer borrows, their lender reviews your business as closely as the buyer does.
• The lender checks your earnings, confirms your tax returns with the IRS and tests whether the business can cover its loan payments.
• For SBA loans, the lender orders its own independent valuation on most sales and, at $3 million or more, a quality of earnings report.
• The lender will not rely on projections. It lends against what the business has already earned.
• Clean books and quick answers keep the lender moving, and a slow lender can delay or end a sale.

Why the lender matters to you

The buyer's lender decides whether your sale can close. If the lender does not approve the loan, most buyers cannot pay. So the lender's review is, in effect, a second due diligence on your business.

What the lender looks at

• Your tax returns, confirmed directly with the IRS.
• Your financial statements, and whether they tie to the returns.
• Your earnings, including which add-backs the lender accepts.
• Debt service coverage: whether the business earns enough to cover the loan payments with room to spare. Lesson 3.4 explains this test.
• The buyer: their credit, their cash and their experience.
• The business itself: a site visit, your lease and your key contracts.

SBA rules effective October 1, 2026

For purchases financed with an SBA loan, rules effective October 1, 2026 (SOP 50 10 8.1) include:

• Coverage. When the buyer is new to the business, the business must earn at least $1.25 for every $1.00 of loan payments.
• No projections. The lender may not rely on projected results to meet that test.
• An independent valuation, ordered by the lender, on any sale with a business price above $350,000, and on smaller sales between related parties. The loan cannot exceed it. Lesson 1.3 covers this.
• A quality of earnings report at a price of $3 million or more, ordered by the lender. Lesson 5.4 covers this.
• A loan term of up to 10 years for the business portion of the loan.

What slows a lender down

• Books that do not tie to the tax returns.
• Add-backs without records.
• A lease with too little time left, or one that cannot transfer.
• A valuation that comes in below the agreed price.
• Missing documents requested late.

If the valuation comes in low

If the lender's valuation is below the price you agreed, the loan will not cover the difference. Under SBA rules, the difference has to come from the buyer's own cash or from a note you carry on full standby, with no payments until the bank is repaid. So the buyer may ask you to lower the price, carry more of it as a standby note or walk away. Lesson 9.4 covers how to respond.