SBA loans on higher multiples

January 15, 2025

by a searcher in Fort Collins, CO, USA

Does anyone have any experience or seen instances of SBA financing on deals with higher multiples outside of the typical 3x-5x? Additionally, if a "qualified" valuation firm with "qualified sources" provides a valuation say at 7x-10x, has the financing been granted? Thanks, Doug

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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

I concur with Ishan. It is hard to make the numbers work on an SBA loan at a multiple much higher than 6x as usually the cash flow available will be insufficient. The SBA loan cannot exceed the valuation amount. So if the valuation comes in for less, you would need either more equity down or a larger seller note to make up the difference. Happy to look at any particular requests you may have and provide more specific guidance and see if there are any creative ways to structure the transaction. You can reach me here or directly at redacted Good luck with your search.

Reply by a lender
from University of Southern California in Los Angeles, CA, USA

The lender will typically hire their own third party valuation firm before the deal closes. Any shortfall in valuation will have to be made up by increasing the equity in the deal either via a larger downpayment or a larger seller note. Frankly, 6x EBITDA is the highest I have seen actually be financed for a SAAS business and seen many deals fail because of biz valuation when the multiple was more than 5x.

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