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Worked example
Real numbers from this tool, line by line.
Equity injection shortfall: 56,000 dollars. That is what a first-time US business buyer finds when the letter of intent prices the business at 1,200,000 with 70,000 of buyer cash and a 120,000 seller note that gets paid during the SBA loan.
| Line | Value |
|---|---|
| Total project cost | 1,260,000 |
| Required equity injection (10%) | 126,000 |
| Seller note SBA counts as equity | 0 |
| Equity SBA counts | 70,000 |
| Equity injection shortfall | 56,000 |
| DSCR (needs 1.25) | 1.39 |
The debt service coverage passes. The equity does not, and the lender cannot waive it on an Initial Acquisition.
Why the seller note counts zero
SBA SOP 50 10 8.1, effective 2026-10-01, keeps a 10% minimum equity injection for a change of ownership, measured on total project cost: the purchase price plus closing costs, working capital and other costs needed to become operational. On a 1,260,000 project that is 126,000.
A seller note can supply part of that injection only when it is on full standby: no principal and no interest for the whole term of the 7(a) loan, signed on SBA Form 155 or the lender's equivalent. Even then, standby debt and other limited sources can supply no more than half of the required injection. Many LOI drafts still promise the seller payments from month one, or a two-year standby. Under the current SOP that note counts as zero.
The same LOI, one clause changed
Set the seller note to full standby and run the check again. SBA now counts 63,000 of the 120,000 note, the equity it counts rises to 133,000, and the shortfall falls to 0. Because the seller is no longer paid during the loan, the note's 15,987 of annual debt service leaves the DSCR, which rises from 1.39 to 1.52.
If the seller refuses standby, the fix sheet shows the other road: the cash you still need, and the highest price the seller's EBITDA carries at 1.25 DSCR. In the example that ceiling is 1,328,233 with the same cash and note.
Three more lines the LOI must get right
Earnouts. Seller earnouts are prohibited in SBA change-of-ownership loans. If you want protection against a revenue drop, write a buyer rebate instead: the seller pays you back if performance misses a target, and the rebate goes to the 7(a) principal.
Seller transition. In an Initial Acquisition the seller cannot stay as an owner, officer, director or employee. A consulting agreement of up to 24 months in total is allowed.
Due diligence. The lender orders a business valuation from a qualified source when the business purchase price is over 350,000, and a quality of earnings report at 3,000,000 or more.
What the check does
You type eight numbers from your draft letter: purchase price, other project costs, buyer cash, seller note, whether the note is on full standby, the seller's last fiscal-year EBITDA, the SBA rate on your term sheet and the seller note rate. The page returns the required injection, the note SBA counts, the shortfall, the SBA loan, both annual payments and the DSCR, in your browser.
Free and paid
The page check is free and complete for one deal. The paid pack holds the LOI letter itself as a .docx with 13 sections, its financing paragraph written for SOP 50 10 8.1 (full-standby seller note, no earnout, optional buyer rebate, valuation and QoE contingency), plus the workbook that keeps each deal and adds the fix sheet.
Run your own numbers before the seller countersigns: once exclusivity starts, a 56,000 gap is a renegotiation, not a typo.
15 seconds — what it actually does
Questions people ask
What does this LOI template check do?
You type the price split from your draft letter of intent: purchase price, other project costs, your cash, the seller note, whether that note is on full standby, the seller's EBITDA and your two rates. It returns the SOP 50 10 8.1 equity injection shortfall, the SBA loan, the annual debt service and the DSCR, so the LOI you sign is one an SBA lender can approve.
Who is this LOI template for?
First-time buyers of a US small business who will finance with an SBA 7(a) loan: searchers, ETA buyers and owner-operators writing a letter of intent for an Initial Acquisition. It also helps brokers and sellers test whether a buyer's offer survives the lender's rules before granting exclusivity.
Why not use a free LOI template?
Free LOI templates and generators leave the financing paragraph to you, and some still describe a 2-year seller-note standby. Under SOP 50 10 8.1, in force since 2026-10-01, a seller note counts toward the 10% equity injection only on full standby for the whole 7(a) term and for at most half of it, and seller earnouts are prohibited.
What is free and what is paid?
The page check is free and complete: one deal, every result on screen, nothing blocked. The paid pack adds what you need once the numbers work: the LOI letter itself as a .docx with SBA-ready financing clauses, and the workbook that keeps each deal and shows the cash needed with a full-standby note and the highest price your EBITDA carries at 1.25 DSCR.
How does the cost compare to the alternatives?
The leading Whop due diligence checklist for buying a business sells at $69 one-time and does not compute the SBA structure. This pack is a one-time payment and checks the letter before a lender, attorney or quality of earnings provider bills you for a deal whose equity injection was short from the start.
When do these SBA rules change next?
SBA lists SOP 50 10 8.1 with an effective date of 2026-10-01; it replaced SOP 50 10 8, which took effect 2025-06-01. SBA posts every new SOP 50 10 version and technical update on its SOP page, and the rules sheet in this pack is updated when the next one changes the equity, standby or DSCR lines.
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