This is one of the most common traps in business acquisition. The numbers look incredible, and the deal still dies instantly.
At first glance, this deal looks like a gift. It is listed at $1.95M, doing over $800K in cash flow on roughly $2.1M in revenue.
Run it through a standard SBA scenario and everything checks out. You are left with over $500K in cash flow after debt, margins are close to 38%, and the DSCR is around 2.7.
Most buyers stop here. The numbers work. The deal feels safe. They start moving forward.
The Problem
This business was established in 2024.
That single detail changes everything.
Why Banks Say No
SBA lenders do not finance how good a business looks today. They finance history.
Without multiple years of tax returns, there is no way to verify that the cash flow is stable, repeatable, and durable. From a lender’s perspective, this is still an unproven business.
Even if everything is real, there is not enough data to support a loan of this size.
What Buyers Miss
- Strong numbers are not enough: Banks care more about consistency than peak performance.
- No track record: Less than 2–3 years of history makes underwriting extremely difficult.
- Time waste: Buyers can spend months on deals that were never financeable.
- False confidence: High margins and cash flow create a misleading sense of safety.
- Deal structure changes: Without SBA, buyers may need significantly more equity or seller financing.
Reality Check
This might be a great business. It might even be growing fast. But that does not make it a financeable deal.
And if you are planning to use SBA, that is the only thing that matters.
BizHub Take
This is not a bad business. It is just not an SBA deal yet.
The biggest mistake buyers make is chasing deals that look perfect on paper but fail basic financing requirements. This is how you lose time, momentum, and opportunities that actually close.
Want to avoid deals like this? Run your numbers through the BizHub Deal Calculator →