How the stress test is calculated.

The SDE basis is either the last fiscal year on its own or the average of the last two, your choice. Under SOP 50 10 8.1 those are the only two options a lender may use, so the tool offers no third.

Your salary as the new owner comes out before debt service. A lender will not accept a zero here: somebody has to run the business, and if that person is you, your compensation is a real cost of the business, not a distribution.

The capex reserve comes out too. Equipment wears out on a schedule that has nothing to do with your loan amortization, and a deal that only covers because it spends nothing on maintenance is a deal that fails in year three.

The guaranty fee is financeable, which makes the arithmetic circular: the fee depends on the loan, the loan depends on the project, and the project includes the fee. The tool resolves it in two passes. It computes the fee on the pre-fee loan, adds that fee to the project, and recomputes once. Two passes is enough because the second-order correction is smaller than a dollar at any realistic deal size.

Your equity injection and seller note are entered as percentages of total project cost, not of the purchase price. That is the base the SBA measures the injection against, and using the purchase price instead is the most common way a searcher arrives at closing short.

The guaranty is 75% of the gross loan above $150,000, and 85% at or under it. The fee applies to that guaranteed portion, not to the whole loan.

FY2026 tiers: gross loans at or under $150,000 pay 2%. From $150,001 to $700,000, 3%. Above $700,000, the fee is 3.5% of the first $1,000,000 of the guaranteed portion plus 3.75% of everything above that.

The maximum 7(a) loan is $5,000,000. The tool flags a structure that breaks it rather than quietly solving around it.

A business acquisition amortizes over 10 years. Owner-occupied real estate can go to 25. When a deal has both, the SBA loan carries a single blended term, and the tool computes it as the weighted average of the two by their share of total project cost.

Real estate that is not owner-occupied gets neither the 25-year weight nor a pass on the eligibility check. Investment property is not an eligible 7(a) use, and a model that amortizes it over 25 years produces a coverage number no lender will reproduce.

The SBA payment is a standard monthly amortizing payment at the all-in rate, annualized. The all-in rate is WSJ Prime plus your lender's margin, both editable, because the answer moves more with rate than with almost anything else you can negotiate.

The tool checks that rate against the SBA maximum for the loan size: Prime plus 6.5% at or under $50,000, plus 6.0% to $250,000, plus 4.5% to $350,000, and plus 3.0% above that.

Other business debt service is included at face value. Equipment loans and lines of credit the business already pays do not disappear at closing, and lenders test global coverage.

A seller note on full standby, meaning no payments of principal or interest for the life of the SBA loan, contributes nothing to counted debt service. It is the single most powerful structural lever in the model, which is why the tool suggests it whenever coverage fails and the note is not already on standby.

An interest-only note counts its actual interest under SOP 50 10 8. Under SOP 50 10 8.1 the lender must impute a 10-year amortization for coverage testing, so the same note produces a much larger counted payment. This is the change that quietly kills the most structures.

An amortizing note counts its real payment under both regimes.

Both regimes require 10%. Under SOP 50 10 8.1 that minimum is non-waivable for an initial acquisition.

A seller note counts toward the injection only on full standby, and even then it is a limited source: it can fund at most 50% of the required injection. The rest has to come from unlimited sources, which in practice means your own cash or outside equity.

The tool reports the counted injection rather than the nominal one, so a structure that looks funded on paper and is short in underwriting shows as short here.

The stress rows re-run coverage with CFADS down 10%, 20% and 30%. Nothing else moves: the point is to isolate how much cash flow the structure can lose before it stops covering.

The break-even decline is the exact percentage at which DSCR touches the floor. It is a more useful number than the headline DSCR, because it answers the question a lender is actually asking, which is how much room this deal has.

The maximum supportable price is solved, not estimated. The tool holds your structure percentages and every other input constant and binary-searches the business price until DSCR equals the regime floor. DSCR falls monotonically as price rises, so the search converges. That number is your walk-away price on financing grounds alone, before you have formed a single opinion about the business.