Business valuation calculator: This tool estimates the fair market value of a small business using Seller's Discretionary Earnings (SDE) and industry-standard multiples. It accounts for growth rate, customer concentration risk, owner involvement, and years in operation — then calculates how much SBA 7(a) financing would cover and what your monthly debt service would be.
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Business Profile
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Financials
Total gross revenue, last 12 months
Net profit + owner salary + add-backs
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Risk Factors
Enter 0 if no single customer dominates
Estimated Fair Market Value
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Low–High range
SDE Multiple: —
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Adjusted SDE
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Applied Multiple
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Industry Benchmark
SBA 7(a) Financing Estimate
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Estimated SBA Loan (80–90% LTV)
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Down Payment Required (10–20%)
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Est. Monthly Debt Service
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Debt Service Coverage Ratio
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SDE Multiple Reference Table
Industry-standard multiples used by business brokers and SBA lenders. Source: BizBuySell, Acquire.com transaction data, SBA 7(a) underwriting guidelines.
| Business Type | Typical SDE Multiple | Notes |
|---|---|---|
| Service businesses | 2.0–3.0x | Home services, cleaning, landscaping. Higher with recurring contracts. |
| Retail | 1.5–2.5x | Brick-and-mortar. Inventory valued separately at cost. |
| Manufacturing | 3.0–5.0x | Premium for proprietary processes, long-term contracts, low key-person risk. |
| Restaurant / Food Service | 1.5–2.5x | Location-dependent. Equipment, lease terms, and brand recognition factor heavily. |
| Tech / SaaS | 3.0–6.0x | Recurring revenue commands premium. MRR churn is the key metric. |
| Professional Services | 2.5–4.0x | Accounting, law, consulting. Discounted heavily for owner-dependent books. |
| Healthcare | 3.0–5.0x | Stable patient panels, insurance contracts, and licensed staff all add value. |
Frequently Asked Questions
What SDE multiple should I use to value a small business?
SDE multiples vary by industry: Service businesses use 2.0–3.0x; Retail uses 1.5–2.5x; Manufacturing uses 3.0–5.0x; Restaurants use 1.5–2.5x; Tech/SaaS uses 3.0–6.0x; Professional Services use 2.5–4.0x; Healthcare uses 3.0–5.0x. Adjust higher for strong growth or recurring revenue, lower for customer concentration risk or heavy owner dependence. This calculator applies those adjustments automatically.
How much will the SBA lend for a business acquisition?
SBA 7(a) loans typically cover 80–90% of the purchase price for qualifying business acquisitions. The buyer puts down 10–20%. Loan terms for business acquisitions are typically 10 years (25 years is reserved for real estate). Current SBA 7(a) rates are approximately Prime + 2.75%, roughly 10.5–11.5% as of 2026. Maximum SBA 7(a) loan is $5 million.
What is SDE and how is it different from EBITDA?
SDE (Seller's Discretionary Earnings) = Net Profit + Owner Salary + Add-backs (one-time expenses, personal expenses run through the business, non-recurring items). SDE is the standard for small businesses under $2M in earnings where the owner is actively involved. EBITDA = Earnings Before Interest, Taxes, Depreciation, Amortization — used for larger businesses with passive ownership. Most SMB acquisitions under $5M use SDE as the valuation basis.
How does owner involvement affect business valuation?
Owner involvement is a major risk factor for buyers. An absentee-owned business (owner works less than 10 hours/week) commands a premium because it can transfer without losing revenue. Full-time owner involvement — especially when the owner IS the client relationship — reduces the multiple by 0.25–0.5x because the buyer must either keep the owner on retainer or risk attrition. Buyers should always ask: "What happens to this business the day after the owner leaves?"
What is a typical down payment to buy a small business?
With SBA 7(a) financing, the buyer typically puts down 10–20% of the purchase price. For a $500K business, that's $50K–$100K out of pocket. The SBA covers the remaining $400K–$450K as a loan. Some deals use seller financing for part of the down payment. Always budget for working capital (3–6 months operating expenses) on top of the down payment — SBA lenders require it.
How do I calculate monthly payments on an SBA business acquisition loan?
SBA 7(a) business acquisition loans typically use a 10-year amortization at current rates (~10.5%). Monthly payment formula: P × [r(1+r)^n] / [(1+r)^n − 1], where P = loan amount, r = monthly rate (annual rate ÷ 12), n = 120 months. Example: $400K loan at 10.5% over 10 years ≈ $5,400/month. Your annual SDE must cover annual debt service at a 1.25x or higher ratio to qualify for SBA financing.