Currently looking at a business with two successful retail locations and a third location just opened about two months ago. The two locations have grown nicely and have great reputation in the community (reviews, awards, etc) and the third location seems promising.

However, the sellers are pricing this based on projected earnings for 2024, meaning it's valued at almost 5X of 2022 SDE when most businesses in this size are valued at 3X, 3.5X SDE tops.

Has anyone tried to finance a business like this? With such high valuation, assuming I put down 15%, their DSCR based on historical cash flow is barely 1.2, which I know would turn away many SBA lenders. I do feel comfortable however that their third location can bring the ratio to 1.5+ fairly soon. Obviously that's future earnings and not guaranteed, so I'm wondering how SBA lenders will react to this.

Seller is willing to carry a note but no more than 10% as he's trying to build up cash reserves to deal with the said health issue.