Owners and buyers tend to negotiate a price and assume the deal is theirs to make. In a bank-financed transaction, it is not. The bank puts more money into the deal than the buyer or the seller, and that gives it the loudest voice at the table. It sets the value, it approves the structure, and it decides whether the sale happens at all. Understanding how a lender thinks is the difference between a deal that closes and one that stalls in underwriting.
The bank is the biggest check at the table
When an architecture, engineering, or land surveying firm sells with SBA financing, the lender is funding the large majority of the purchase price. The buyer brings a small equity injection and the seller is paid at closing, but the money at risk is mostly the bank's. Whoever holds the most risk holds the most influence, and here that is the bank. It reviews the agreement between buyer and seller and approves the terms before anything closes.
It sets the value, not the negotiation
The number two parties agree on across a table is a starting point, not the price. On every SBA-financed deal, the bank hires its own independent valuation specialist to determine what the firm is worth, the same way it orders an appraisal before writing a mortgage. That valuation is built on historical, provable cash flow, not on projections, and lenders will not accept the discounted-cash-flow method. A/E and surveying firms with $1M to $10M in sales generally land at 5x to 7x EBITDA, or 2x to 4x SDE for smaller owner-operated shops, but the bank's number is the one the deal has to survive. If the negotiated price cannot be supported by the firm's actual earnings, the structure has to change.
It underwrites cash flow, not optimism
The bank's core question is simple: will the business generate enough cash to service the loan under new ownership? That is measured by DSCR, and most lenders want to see a comfortable cushion on historical numbers. Backlog quality, client concentration, and management depth all feed that judgment. We cover the specific criteria in detail in what SBA lenders actually look for; the point here is that everything the bank weighs traces back to the durability of the cash flow.
It shapes the structure
Because the bank is approving the transaction, it also influences how the deal is built: the required equity injection, whether a small standby seller note is used, and the repayment terms. A deal that is priced or structured in a way the bank cannot underwrite does not get a counteroffer from the buyer. It gets a no from the lender.
How to bring the bank a deal it can say yes to
Come prepared the way the bank expects. Clean, historical financials at the project level. A documented backlog of contracted work. A second layer of management so the firm is not one person. And a price grounded in real earnings rather than hope. Get those right and the bank becomes the reason the deal closes rather than the reason it dies. For a fuller sense of the value the bank is testing, start with what your firm is actually worth.