# Business Acquisition Loan Calculator: Can the Business Cover Its Own Payment?

Put in the price, the business's cash flow and how the deal is funded — your down payment, a seller note and the loan — and the calculator answers the lender's first question: does the business's own cash flow cover the debt? It returns the coverage ratio, the payments and the cash needed at closing. Nothing here is quoted to you.

[See your financing options](https://capitalgurus.com/apply/) · Or call [(725) 425-4307](tel:+17254254307)

Soft credit pull only, no obligation.

Rates, factor rates, fees and terms are set by the funding provider that makes your offer and are disclosed in that provider's agreement. Figures on this page are illustrative ranges from providers in our network, not offers.

## In this section

- [Compare: Calculators](https://capitalgurus.com/calculators/)
- [Compare: SBA loans](https://capitalgurus.com/loans-and-financing/sba-loans/)

## Run the numbers

Start with the figures on the listing and the seller's books, then move the down payment, the seller note and the term until the coverage ratio reads the way a lender needs it to.

- Debt service coverage, the test a lender runs first
- The loan and a seller note together, with full standby
- Nothing to sign up for, and nothing here is quoted to you

The calculator takes:

- Purchase price
- Annual cash flow (SDE or EBITDA)
- Owner salary replacement
- Down payment (equity injection), in percent or dollars
- Seller note: share of the price, rate, term, and whether it is on full standby
- Additional working capital
- Closing costs (%), paid in cash
- Example rate — enter the rate from your offer (%): starts at the Prime rate plus the SBA's maximum spread for the loan size
- Acquisition loan term (years; up to 25 with real estate)
- Whether the SBA guarantee fee is financed

It returns the debt service coverage ratio (DSCR), read against 1.15x and 1.25x, the monthly payments on the loan and the seller note, the cash needed at closing, the cash flow after debt service and the purchase multiple.

Example: price $1,500,000, cash flow $450,000, owner salary $100,000, 10% down, a 10% seller note at 6% over 10 years, loan at 10% over 10 years. DSCR 1.63x; total monthly payment $17,939.67; cash needed at closing $195,000; cash flow after debt service $134,724 a year.

### Three illustrative cases

| Case | DSCR | Monthly | Cash at closing |
| --- | --- | --- | --- |
| $1.5M service business, 10% down, 10% seller note | 1.63x | $17,939.67 | $195,000 |
| $500K main-street business, 10% down, seller note on full standby | 1.70x | $5,404.97 | $65,000 |
| $3M with real estate, 25-year term | 2.13x | $25,466.17 | $390,000 |

Illustrative example, not an offer.

[See your financing options](https://capitalgurus.com/apply/) · [See SBA loan options](https://capitalgurus.com/loans-and-financing/sba-loans/)

The starting figures are round numbers chosen so the tool has something to show. Replace them with the seller's figures and the lender's term sheet.

What the arithmetic assumes: Fixed rates, monthly payments and no prepayment, on the loan and the seller note alike. The loan is the price less the down payment and the seller note, plus any working capital, plus the SBA guarantee fee when it is financed; the fee is worked out on the guaranteed share from the SBA's published schedule. Cash flow available for debt is the annual cash flow less the owner's replacement salary, and the coverage ratio sets it against a year of both payments; a seller note on full standby counts as paying nothing. Closing costs are paid in cash. Where an agreement differs from these assumptions, the agreement is what governs.

## At a glance

- **Usual route**: An SBA 7(a) file through a participating lender
- **Term**: Terms up to 10 years in our network, depending on the funding provider; longer on property-heavy SBA deals
- **Timeline**: Weeks, often months, on an SBA file. Not days.
- **Who decides**: The lender that reads the deal; Capital Gurus is a broker and presents your file

## The amount is not the purchase price

**Add what the business needs to run.** Start with the price. Add payroll until the first collections land, inventory, the deposit on a new lease, the float the seller takes out, and the transaction costs.

**Take off what is not borrowed.** The cash you are putting in, and anything the seller agrees to carry. What is left is the loan, and the calculator works it out from those figures.

Financing the price alone is the classic way to buy a sound business and run out of money in the first quarter. [Working capital financing](https://capitalgurus.com/loans-and-financing/working-capital/) covers the second half of the figure.

## What the buyer is expected to bring

**On an SBA 7(a) file.** Programme rules require a minimum share of project cost from the buyer. A seller note can count toward part, but only on full standby for a set period, which many sellers decline. [SBA 7(a) loans](https://capitalgurus.com/loans-and-financing/sba-loans/7a/) states the SBA's figures.

**On a conventional file.** The lender sets the requirement itself, and it is close to the first question you will be asked. Where the deal does not need an SBA file, a [business term loan](https://capitalgurus.com/loans-and-financing/term-loans/) is the shorter and faster route.

Every acquisition lender expects money in the deal. Either way the deposit lowers the loan, and the payment with it: the one lever on this page you fully control. [Do Business Loans Require a Down Payment?](https://capitalgurus.com/blog/do-business-loans-require-a-down-payment/) covers the general case.

## Long schedules, smaller payments, larger totals

Stretch the term and the two numbers move in opposite directions: the payment falls and the total climbs, because interest has longer in which to accumulate. A lower payment lifts the coverage ratio; know what that comfort costs.

| Term | Monthly payment | Cost of the money |
| --- | --- | --- |
| 5 years | $15,935.28 | $206,117 |
| 7 years | $12,450.89 | $295,875 |
| 10 years | $9,911.31 | $439,357 |

$750,000 at 10% a year, no fee. Illustrative example, not an offer. Worked out with the calculator's own arithmetic.

**Why the schedule is long.** The business must pay for itself from its cash flow, and a long schedule keeps the payment small enough. A payment it can cover is worth paying for; know what the comfort costs.

**Where the rate comes from.** From the lender that reads the deal. [Business loan interest rates](https://capitalgurus.com/guides/business-loan-interest-rates/) explains what moves a rate, and [SBA loan rates](https://capitalgurus.com/guides/sba-loan-rates/) how the cap on an SBA quote is built.

## Seller financing and an earn-out sit beside the loan

**A seller note.** Carries part of the price on its own schedule, often at a different rate, sometimes interest-only at first, sometimes on standby behind the main loan. In this tool: Its own share, rate and term, and a standby switch; plan for the payment once it starts.

**An earn-out.** Pays part of the price later, and only if the business hits numbers agreed in the contract. It is contingent, so it has no schedule to amortise. In this tool: Nowhere: plan for it as a claim on future cash, not as a payment.

The calculator adds the loan and the seller note and sets a year of both against the cash flow: [debt service coverage](https://capitalgurus.com/blog/debt-service-coverage-ratio-explained/), the ratio a lender runs on that total.

## The closing costs the calculator only approximates

An acquisition closing carries several charges. The calculator takes the two biggest, and leaves the rest to the term sheet.

**In the calculator**

- The SBA guarantee fee, financed or paid at closing
- Closing costs as a share of the price, paid in cash: packaging, appraisal, legal and escrow work

**Outside the arithmetic**

- A prepayment fee on the longer SBA maturities, set under SBA rules
- A rate that moves during the term: the tool holds it fixed

[Business loan terms explained](https://capitalgurus.com/guides/business-loan-terms/) defines them one by one.

## Who actually decides this

Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders. That lender underwrites the file, prices it and closes it, and the SBA reviews the guarantee. It reads the deal, not the payment you produced here:

1. The target's tax returns, and the trend in them
2. Your experience in the industry, and your personal credit
3. The valuation, the lease and payment coverage

Every owner above the SBA's ownership threshold signs a personal guarantee. An application with us starts with three months of bank statements.

[See your financing options](https://capitalgurus.com/apply/). An application takes about 5 minutes and is a soft credit pull only. No figure on this page is quoted to you.

- [Personal guarantees explained](https://capitalgurus.com/blog/personal-guarantees-explained/)
- [How long SBA approval takes](https://capitalgurus.com/blog/how-long-does-sba-loan-approval-take/)
- [Business loan requirements](https://capitalgurus.com/guides/business-loan-requirements/)

## Keep reading

### Related pages

- [All business loan calculators](https://capitalgurus.com/calculators/)
- [Business loan calculator](https://capitalgurus.com/calculators/business-loan-calculator/)
- [Equipment financing calculator](https://capitalgurus.com/calculators/equipment-financing-calculator/)
- [Business financing options](https://capitalgurus.com/loans-and-financing/)

## Frequently asked questions

### How much down payment do you need to buy a business?

Enough for the lender to see real money at risk. On an [SBA 7(a)](https://capitalgurus.com/loans-and-financing/sba-loans/7a/) file the buyer has to bring at least 10% of total project cost under programme rules, and a seller note counts toward part of it only on full standby. On a conventional file the lender sets the requirement itself. Move the down payment in the calculator and watch the coverage ratio and the cash needed at closing.

### What is a seller note?

Part of the price the seller agrees to be paid later, on a schedule of its own, often at a different rate from the loan. It lowers the loan and the cash you bring, but it is still debt the business has to carry. On full standby it pays nothing for a period the lender sets, which is why the calculator leaves it out of the coverage ratio when you switch standby on.

### What DSCR do lenders look for when buying a business?

Debt service coverage is the business's cash flow, after paying you to run it, divided by a year of payments on all the debt. Many providers look for 1.25x or more, and below 1.15x the cash flow may not cover the debt at all. The bar is each lender's own; the calculator reads your ratio against those two marks.

### Can you use an SBA loan to buy a business?

Yes. The most common route is an SBA 7(a) loan from a participating lender, often with a seller note and an equity injection from the buyer. The lender reads the business's cash flow, your experience and your credit, and the process takes weeks. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders. [SBA loans](https://capitalgurus.com/loans-and-financing/sba-loans/) sets out who does what.

### What amount should I put in for working capital?

What the business needs from the day you take over: payroll before the first collections land, inventory, a landlord's deposit on a fresh lease, the float the seller is taking out with them. The calculator adds it to the loan. Financing the price alone is the common error, and the cash runs out in the first quarter.

### Why are acquisition schedules so long?

Because the business has to pay for itself out of its own cash flow. A long schedule shrinks the payment to something the target's earnings can cover, which is the test the lender runs. The trade-off is the total: stretch the term in the tool and the coverage ratio rises while the interest paid climbs.

### Where does an earn-out go?

Nowhere in the arithmetic. An earn-out pays part of the price later, and only if the business hits agreed numbers, so it has no fixed schedule to amortise. Treat it as a claim on future cash flow, size the worst case, and check the business can carry it alongside the loan payment rather than instead of it.

### Who decides an acquisition loan?

Not Capital Gurus. The usual route is an SBA 7(a) file, and an SBA-participating lender underwrites it, prices it and closes it, with the SBA reviewing the guarantee behind it. Capital Gurus is a broker: we help prepare the file and present it to lenders, make no credit decision and set no rate.

### Can I use this for buying out a business partner?

Yes. A partner buy-out is an eligible use on a 7(a). Enter the price of the share, the cash flow the whole business produces and any working capital it needs afterwards. The lender still reads the whole company, not just the share changing hands.

Still have a question? [talk to a funding advisor](https://capitalgurus.com/contacts/)

Capital Gurus is not a lender. Rates, fees and terms are set by the funding provider and disclosed in your agreement. Capital Gurus · 1700 S Pavilion Center Dr, Ste 420, Las Vegas, NV 89135.

Nothing on this page is financial, legal or tax advice.

## Decisions from some providers the same day, depending on the provider.

Subject to provider approval and document turnaround.

[Apply now](https://capitalgurus.com/apply/) · Call [(725) 425-4307](tel:+17254254307)

About 5 minutes, soft credit pull only. [talk to a funding advisor](https://capitalgurus.com/contacts/)

By the Capital Gurus Editorial Team · Reviewed by Joseph Wartz · [Editorial policy](https://capitalgurus.com/editorial-policy/)

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Source: https://capitalgurus.com/calculators/business-acquisition-loan-calculator/ · Last reviewed 2026-11-09 · Capital Gurus is not a lender.