An SBA underwriter reviewing an acquisition file is asking one question: will this business, run by this buyer, repay this loan from cash it has already proven it can make?
Every page of your plan should answer part of that question. Pages that do not answer it are noise.
Under SOP 50 10 8.1, which applies to loans numbered from 1 October 2026, the answer has to come from history, not forecasts. That shifts what a strong acquisition plan looks like. Below are the nine things underwriters check, in the order they usually check them.
How an Acquisition Plan Differs from a Start Up Plan
A start up plan sells a future. An acquisition plan proves a past and shows the buyer can continue it.
| Element | Start Up Plan | Acquisition Plan |
| Repayment proof | Projections | Historical and trailing 12 month earnings |
| Key risk | Will customers come? | Will customers stay after the seller leaves? |
| Management focus | Founder vision | Buyer experience and transition plan |
| Market section | Size of opportunity | Competitive position of an existing business |
| Valuation | Not relevant | Price must match independent valuation |
| DSCR floor | Lender policy | 1.25x on historical earnings (Initial Acquisition) |
If your writer hands you a start up template with the seller’s numbers dropped in, the underwriter will notice within minutes.
The 9 Things SBA Underwriters Check in an Acquisition Plan
1. Historical Cash Flow That Reconciles
Underwriters start with three years of the seller’s tax returns and the trailing twelve months. Then they compare those numbers to your plan.
If your plan says revenue was $1.4 million and the tax return says $1.25 million, the file stops. Every figure in your historical section must trace to a tax return line, a bank statement or a reviewed financial statement.
What passes: A historical table that shows tax return revenue, book revenue and an explanation for any gap (such as fiscal year timing or accrual adjustments).
2. Add Backs You Can Document
Seller’s Discretionary Earnings (SDE) and adjusted EBITDA rely on add backs: owner salary, personal vehicle expenses, one time legal fees, family members on payroll who will not stay.
Underwriters accept add backs that are documented and will not recur under the new owner. They reject vague ones.
| Add Back | Usually Accepted | Usually Challenged |
| Seller salary and payroll taxes | Yes, replaced by buyer salary | No |
| Seller personal auto or phone | With receipts or ledger detail | If undocumented |
| One time legal or relocation costs | With invoices | If they recur yearly |
| Family member wages | If role ends at closing | If the role is still needed |
| “Cash sales not reported” | Never | Always |
That last row matters. Unreported cash income cannot be counted. If the broker’s listing leans on it, your DSCR will fall short.
3. DSCR on Historical Earnings
For an Initial Acquisition, the minimum debt service coverage ratio is 1.25x under SOP 8.1. It must be met using the last fiscal year end or an average of the prior two years. Projections cannot fill the gap.
Here is a simple version of the calculation:
- Adjusted historical cash flow (after add backs): $420,000
- Less buyer’s market rate salary: $95,000
- Cash available for debt service: $325,000
- Annual debt service (SBA loan plus seller note payments): $240,000
- DSCR: 1.35x
A 1.35x ratio clears the floor with a small cushion. Anything under 1.25x needs a lower price, more equity or a longer seller note standby.
4. Buyer Experience and Management Fit
SBA does not require industry experience by rule, but underwriters weigh it heavily. A buyer with no operating background buying a $2 million machine shop is a harder file than a shop foreman buying the same business.
Your management section should answer:
- What have you managed before (people, budgets, P&L)?
- What do you know about this industry, and where are your gaps?
- Who on the existing team stays, and in what roles?
- Which advisors (CPA, attorney, industry mentor) support you?
Gaps are fine. Hiding them is not. Name the gap and show how the transition plan fills it.
5. The Transition Plan
Under SOP 8.1, the seller can stay as a consultant for up to 24 months. Underwriters now expect a real plan for that period.
A strong transition section covers:
- Months 1 to 3: Seller introduces buyer to top 20 customers and key suppliers. Buyer shadows operations.
- Months 4 to 6: Buyer takes over pricing and hiring decisions. Seller handles technical escalations.
- Months 7 to 12: Seller shifts to on call support. Licenses and vendor accounts fully transferred.
- Months 13 to 24 (if needed): Advisory role only, clearly scoped.
Customer attrition after a sale is the risk underwriters fear most. The transition plan is where you prove you have thought about it.
6. Customer Concentration and Revenue Quality
If one customer is 30 percent of revenue, the underwriter asks what happens if that customer leaves after the owner changes.
Your plan should show the top 10 customers by revenue share, contract terms and how long each has been with the business. If concentration is high, explain the mitigation: signed contract assignments, a longer seller consulting role or an earn out on that account.
7. Equity Injection and Sources of Funds
Initial Acquisitions require a 10 percent equity injection that cannot be reduced. Seller notes on full standby and minority investor equity can supply no more than half of it. The rest must be your own money.
Your Sources and Uses table should show:
| Source | Amount | Type |
| SBA 7(a) loan | $1,620,000 | Debt |
| Buyer cash | $100,000 | Unlimited equity |
| Seller note on full standby | $80,000 | Limited equity |
| Total | $1,800,000 |
Here the required injection is 180,000.Thesellernote(80,000) is under the $90,000 Limited cap, so the structure passes.
Back up the buyer cash with bank statements that show where it came from. Large recent deposits need a paper trail.
8. Valuation Support
Total transaction debt cannot exceed the business valuation under SOP 8.1. If the independent valuation comes in below the agreed price, the difference has to be covered by equity, or the price comes down.
Your plan should include a short valuation section that states the purchase price, the multiple it implies (for example, 3.2x SDE) and how that compares to typical multiples for the industry. It does not replace the formal valuation. It shows the underwriter you did not overpay blindly.
9. Forward Projections as a Stress Test
Projections still belong in an acquisition plan. They now serve a different purpose. They show the business can absorb new debt and the buyer’s changes without breaking.
A good projection section includes a base case that starts at actual trailing earnings, a downside case (revenue down 10 to 15 percent) and any growth plan with clear, evidenced assumptions. Our guide on SBA business plan financial projections and what underwriters actually check covers the specific tests.
One warning. Aggressive growth assumptions in an acquisition plan do more harm than good. They signal that the buyer needs growth to make the deal work. Read why revenue projections get SBA loan applications denied before you add a hockey stick.
The Sections Underwriters Skim (and Why They Still Matter)
Market analysis. Underwriters rarely deny a file on market analysis alone, but a weak one raises questions about the buyer’s homework. Focus on local competitors, pricing position and any threats (a new competitor, a lease expiry, a regulation change). See how we structure it in our guide on market analysis for a bank loan business plan.
Operations. Show the lease term (it should cover the loan term or have renewal options), key equipment condition and any licenses that need transfer.
Appendices. This is where the proof lives: tax returns, the LOI, the lease, customer lists and your resume. Our explainer on what belongs in the appendices of a business plan lists what to attach.
Acquisition Plan Readiness Scorecard
Use this before you submit. Score each item 0 (missing), 1 (partial) or 2 (complete).
| Item | Score (0 to 2) |
| Historical financials reconcile to tax returns | |
| Every add back documented | |
| DSCR at or above 1.25x on historical earnings | |
| Buyer resume and gap mitigation included | |
| Month by month transition plan | |
| Top 10 customer concentration table | |
| Sources and Uses with Limited and Unlimited tags | |
| Purchase price supported by multiple analysis | |
| Base and downside projections | |
| Lease covers loan term |
16 to 20: Ready for underwriting. 11 to 15: Fix the gaps before submission. 10 or below: Expect conditions or a decline.
Common Mistakes We Fix in Acquisition Plans
Using the broker’s CIM as the plan. A Confidential Information Memorandum is a sales document. Underwriters discount it.
Forgetting the buyer’s salary. SDE includes the owner’s pay. If you do not deduct a market rate salary for yourself, your DSCR is overstated.
Ignoring working capital. A business with $40,000 in monthly payroll needs cash on day one. Show where it comes from.
Leaving the seller note terms vague. State the amount, rate, term and standby period. Underwriters need this for the coverage math.
How Long Does an Acquisition Plan Take?
A clean acquisition plan usually takes one to two weeks once the seller’s financials are in hand. Delays almost always come from missing documents, not writing time. Our guide on how long an SBA business plan takes to write breaks the timeline down, and our SBA business plan cost comparison shows what to budget.
If you are preparing the plan yourself, start with our guide on how to write an SBA business plan in 5 simple steps, then return to the scorecard above.
Frequently Asked Questions
Do I need a business plan to buy a business with an SBA loan?
Yes. SBA lenders require a business plan for change of ownership loans. It must show historical cash flow, the buyer’s ability to run the business and how the loan will be repaid.
What DSCR do SBA lenders require for acquisitions?
Under SOP 50 10 8.1, Initial Acquisitions and Owner Buyouts need at least 1.25x on historical or adjusted trailing earnings. Business Expansions need 1.15x.
Can projections help me qualify if historical cash flow is short?
Not for the coverage test. Projections remain useful as a stress test, but they cannot replace historical earnings in the DSCR calculation.
How much equity do I need to buy a business with SBA?
At least 10 percent of the project cost for an Initial Acquisition. No more than half of that can come from a standby seller note or minority investors.
Does the seller have to stay after the sale?
Not by rule, but lenders often require a transition period. Under SOP 8.1 the seller can consult for up to 24 months.
Get an Acquisition Plan Built for Underwriters
An acquisition plan is not a pitch. It is evidence, organized so an underwriter can say yes quickly.
BPlanWriter builds SBA acquisition plans around the Appendix 15 tests: reconciled historicals, documented add backs, historical DSCR schedules, tagged Sources and Uses and real transition plans. Our SBA / Bank Loan Business Plan service covers first time buyers, owner buyouts and expansion deals.
Book a free consultation and send us the LOI and the seller’s last three tax returns. We will tell you whether the deal clears 1.25x before you spend money on the plan.
This article is general information and not lending advice. Confirm requirements with your SBA lender.
