SBA Valuations

searcher profile

November 09, 2025

by a searcher in United States

Could someone walk me through how the independent valuation process with a SBA lender. Some questions: 1) In today's market, what's a high-level, acceptable valuation range for a ~$1M SDE business? 2) Are we capable of going 5x or more? 3) Does a more conservative LTV allow someone to underwrite a higher price multiple? 4) What's the likelihood (high/low) of your loan getting denied based on too lofty of a valuation? I'm curious how this part of underwriting works.
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Reply by a lender
from Cornell University in Los Angeles, CA, USA
Hi Anon - nice to meet you. These are excellent questions and worth breaking down clearly. For a business generating around $1M in SDE, valuations in today’s market generally fall between 3.0x and 4.5x SDE, depending on stability, customer concentration, and recurring revenue. Some high-quality businesses can reach 5x, but only when they demonstrate strong margins and predictable growth. If you're looking to compare valuations, Searchfunder actually has a lot of information on its Deal Stats section (https://searchfunder.com/bvr). A lower loan-to-value ratio does not automatically justify a higher multiple. SBA lenders primarily look at cash flow, not collateral, so the deal must still maintain at least a 1.25x DSCR after all debt and a reasonable owner salary. If the purchase price is too high relative to earnings, the valuation will likely be adjusted during underwriting. We have a lot experience financing small business acquisitions via the SBA. If you ever need help talking through a deal, I am happy to help. We work with all the major SBA lenders. The bank pays us after your loan closes, so this is a 100% free service for you. You can email me directly at redacted or schedule a meeting with me: https://cal.com/francodeguzman/30min. Look forward to chatting!
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Reply by an intermediary
from University of Nevada in Henderson, NV, USA
Every deal is different and every lender has its industries that they are confident on lending on because they feel they understands its risk and can underwrite the loan properly. So my opinion to your question is to find a broker for SBA loans and let them shop you around and just call one and pose your questions. If you need some suggestions of ones to call...shoot me a message, but reference this post
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