Can this SaaS deal be funded with SBA7a?

November 20, 2025

by a searcher from Warwick Business School in Wappingers Falls, NY 12590, USA

Hi All - I am looking at a SaaS company in the Marketing Tech space. Small single owner company, no employees. Company has been operational for 5 years. Runs completely absentee. It has a high domain authority across search engines and is a name brand in this specific niche so it runs on its own. 100% online sales so easily verifiable. The SDE is $400K averaged over the last 3 years. Seller wants $1.85M in purchase price and is offering $360K of seller note on 2 year standby. I know exactly how to scale and grow this and eventually sell it to one of the name brand CRM companies. My skillset is IT, software & digital marketing having run, sold and bought such companies. Will this pass lending? Any banker / lender have any interest here? Thank you.

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

Thank you for sharing this opportunity. This looks like a solid opportunity that you have the experience to operate. Based on the business type and the general information provided, getting an SBA 7A loan done on this request should be doable. However, it will need to be the right structure and loan amount. I ran some quick numbers. Assuming 10% down and the seller note over 10 years at a 7% interest rate, I show a debt service coverage ratio ("DSCR") of 1.53x. However, that is without factoring in any salary for you. If you will need to draw a salary from this business, in order to hit at least a 1.25x DSCR, you would be looking at being able to draw a maximum salary of about $70,000 to $75,000. Lenders will want to be sure you have sufficient cash flow from this business or other sources to support your living expenses, so if you need it from this business that would have to be enough. In addition, you indicate above you are looking at average EBITDA of $400,000. Lenders do not use average EBITDA and actually test the DSCR in each individual year. They typically want the DSCR to hit a minimum range (depending on the lender) of 1.25x to 1.35x in each year tested, usually focused on the last two years, which today would be 2024 and the TTM and YTD for###-###-#### Assuming that $400,000 is lower in either period, that could further restrict how much you could borrow or how much you have to draw for living expenses. We are also making the assumption that all $400,000 is adjusted EBITDA a lender will use. If there are add-backs lenders generally do not accept included, this could lower the EBITDA available to service debt. Lastly, the SBA requires a business valuation to be completed on all acquisitions. The valuation firm is going to include a normalized owner's / operator's salary in their analysis. The amount of the SBA 7A loan cannot be higher than the business valuation. Your equity contribution and the large seller note provide plenty of room for the valuation to come in for less, but please keep in mind you would need the business to value for at least the debt amount. I know this whole analysis is very cursory. I would be happy to connect and take a closer look at the actual financial information (happy to sign an NDA if required) and provide you more specific feedback on what can be achieved on this acquisition based on your situation. You can reach me here or directly at redacted Good luck.

Reply by a lender
from California State University, Sacramento in Seattle, WA, USA

Brad did a great job (as usual) laying out a great framework. At Live Oak we’re looking for higher minimum DSC in the 1.50 range which will impact DSC even further per BRADs comments above. With no employees, and if things go sideways with seller on transition, you’ve got no fallback. You might want to consider a larger seller note and making it forgivable if the company falters post close. Is this stable growth or hockey stick? Customer concentrations? Post close liquidity available to fund growth and the j curve? Would need to know a lot more to answer the question on financiability. I have an exec summary template for you to share your overview if interested in talking it through. redacted

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