The deal
Financing
Assumptions
Results
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DSCR below 1.25× is where most SBA 7(a) lenders stop reading. IRR includes the year-10 sale at your exit multiple. This is a planning model, not an appraisal or a financing commitment.
What this model does
It builds ten years of cash flow from three numbers you already know — what the store costs, what it grosses, and what it spends — then layers your financing on top and sells the business in year 10 at a multiple of its final-year earnings.
The two numbers a lender checks first
DSCR is seller's discretionary earnings divided by annual debt service. Below 1.25× most SBA 7(a) lenders stop reading, because the deal has no room for a bad quarter. Cash-on-cash is your first-year cash flow divided by the cash you actually put in at close — the number that tells you whether this beats leaving the money somewhere boring.
What it deliberately leaves out
No depreciation shield, no tax treatment, no working capital swing, no capex reserve for the machines you will replace in year seven. Those matter, and they all make the real number worse than this one. Treat the output as a ceiling, not a forecast.