Earnings multiple and SBA debt service calculator
Enter the earnings you can verify and the asking price. The calculator shows the multiple of earnings that price represents, how the purchase would be financed under typical SBA 7(a) structures, and the debt service coverage ratio (DSCR) a lender would see. It checks whether a price you choose can be financed. It does not tell you what the business is worth.
Example values are filled in so you can see how it works: an illustration, not a real business, and the interest rate is an example, not a current market quote.
How the math works
- Cash available for debt = verified SDE − your salary − capex reserve. Lenders want the business to pay you a living wage before it pays them. SBA's own historical test uses EBITDA, which is close to this when your salary is set at a market rate.
- Total project cost = asking price + closing costs and working capital you finance.
- Your equity = equity % × total project cost. A standby seller note counts toward the required equity, but standby seller debt and minority investors together can cover no more than half of it.
- SBA loan = total project cost − equity − seller notes. Payments are a standard monthly amortization over the term.
- DSCR = cash available for debt ÷ total yearly payments on the SBA loan and any paying seller note.
What this calculator leaves out
- The valuation cap. For SBA 7(a) purchases, the lender orders an independent valuation from a credentialed appraiser (for 7(a) Small and SBA Express loans with a business purchase price of $350,000 or less, it may do an internal valuation instead). Total debt, including any seller note that isn't on full standby, can't exceed it, and if the price is above the valuation the buyer covers the difference with more equity. This tool doesn't estimate that valuation, and neither does OKtoBuy.
- Global cash flow. Lenders also look at your personal debts and income.
- Lender judgment. Lenders adjust earnings, may want more than 1.25, and look at collateral, experience and the lease. See DSCR for buying a business and SBA 7(a) loans for buying a business.
Frequently asked questions
What debt service coverage ratio does the SBA require to buy a business?
Under SOP 50 10 8.1 (effective October 1, 2026), the minimum is 1.25 for an Initial Acquisition and an Owner Buyout, and 1.15 for a Business Expansion, measured on the last fiscal year or the average of the last two. Many lenders set their own higher targets.
Why doesn't this calculator tell me the maximum price I can pay?
Because a price is a valuation question, and this calculator only does the debt-service arithmetic. The calculator shows whether the debt at a price you choose is covered by the earnings you enter. For SBA deals the lender also orders an independent valuation, and total debt can't exceed it.
Which earnings should I enter?
Use SDE built from add-backs you can document, not the broker's headline figure. Our SDE calculator helps you separate solid add-backs from shaky ones.
Does a seller note count as part of my down payment?
Only if it's on full standby: no principal or interest payments for the whole term of the SBA loan. Even then, standby seller debt and minority investor money together can cover no more than half of the required equity injection.
Sources
- SBA SOP 50 10 8.1, Appendix 15: 7(a) Changes of Ownership (effective Oct 1, 2026)
- SBA Form 155, Standby Creditor's Agreement
This calculator runs in your browser; nothing you type is sent anywhere. It is an educational tool, not a valuation, appraisal, lending decision or advice. Lenders apply their own adjustments and policies.