SBA won't accept Add Backs

August 13, 2025

by a searcher from Princeton University in Livingston, NJ 07039, USA

I continue to see deals with family salary add backs, cash income, personal expense add backs, etc. These deals will never get financed by an SBA bank. Here are some ideas I have had and I would love the community's thoughts. 1) Seller Financing 2) Get the SBA to fund only the portion they will accept (not sure if this is possible) 3) Equity partner What have you done to overcome this issue?

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Reply by an intermediary
from Naval Postgraduate School in Bellevue, WA, USA

The bank that you are working with might have issues with addbacks but in my 25 years of experience, I've never seen a rejection of a reasonable addback that supports the cash flow projections for the buyer.

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

Hi ^redacted‌ - The SBA lender will fund based on their minimum internal DSCR. Usually 1.25x on the last two tax returns and the interims. So you could use more equity or a seller note on full standby (10 years) or a seller note that has a partial standby seller note that is on standby for long enough to not be included in the bank's DSCR calculation could be a good option. If the addbacks are needed to get this deal financed and hit the DSCR required on the deal then the easiest way would be working with a lender that can use a well prepared QOE in lieu of the tax returns. There are a handful of SBA lenders that allow this now, but you'll have to be ready to pay the higher end of the SBA interest range, so somewhere around P+2.5%. We would love to help you with this deal. Our service is free to you the borrower, we get paid by the lender.Please email me at redacted or schedule a meeting with me via this link: https://calendly.com/tom-gosbaloans/30min

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