Quick question for Lenders

by a searcher

2 years ago

Most sellers try to lower their tax liability as much as possible which decreases their taxable income on their tax return, however it seems like lenders see the business as less profitable because of this so my question is are there any lenders out there that take the P&L into consideration or do they just add back to the tax return?

1 like
131 views
13 comments

lender from The University of Chicago - Booth School of Business

As another SBA lender, we use tax returns. However, add-backs are common for excess compensation paid to seller, one time expenses, rent that will not be paid when the target is integrated into the acquirer, etc.

2 years ago | like reply | 0 likes

lender from Sam Houston State University - College of Business Administration

If the loan is SBA, we have to use tax returns. I very rarely do a deal that we rely on the financials instead of the taxes and there needs to be a specific reason for it (consolidated taxes with other companies, etc.)

2 years ago | like reply | 1 like

More on Searchfunder

Just Closed on My First Deal! Reflections and Takeaways for other Searchers

45,152 transactions are available on Searchfunder (now searchable by keyword)

Now everyone has unlimited IBISWorld access

Family office looking for traditional searchers

Examples of self-funded searcher websites

Investor seeking Self-Funded Search Deals

What are market terms for Seller Notes?

2 Best Ways To Find Motivated Sellers, Off-Market Deals

Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.

We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.