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Blog Post

Why Business Sellers Should Focus on Financials to Secure Buyer Financing

  • Date Posted: February 20, 2024

If a business owner is considering selling their business, lenders recommend sellers focus on financials early. Prioritizing thorough and precise financial documentation can broaden the pool of potential buyers and enhance the likelihood of securing financing for a future buyer.  

Financials and how they are represented can increase or limit financing options for buyers. If the company does not have room between cash flow and expenses for financing, financing from banks or the U.S. Small Business Administration (SBA) can become off the table – leaving the business with only the available pool of cash buyers. However, if a business has enough room between cash flow and expenses for financing, the pool of buyers can increase. 

Experienced loan officers can provide insightful advice early on to navigate collateral and financing from a buyer’s perspective.  

“About 99% of business purchase transactions utilize SBA financing,” said Debbie Webber, Vice President and Relationship Manager at Coastal Community Bank. “Often, the transactions utilize the 7(a) loan program to acquire the business and the 504 program to finance purchasing real estate. The bank is required by SBA to provide collateral in a 1-1 ratio with the loan amount if possible.”  

SBA also recently increased expectations for lenders. “It is now a priority for SBA loans that we ask for experience in leading a business in the seller’s industry, before we consider lending to them,” Webber said. “Or, if a buyer does not have industry experience, what experience do you have in business that shows you can run a business in a new industry? You can work to gain experience in that industry and business as you prepare to purchase. And the broker can likely help with that.”  

When analyzing a business, brokers gather five years of financials, and lenders gather three years of profit and loss, balance sheet, accounts receivable, accounts payable, work in process, tax returns, and a list of assets.  

Key documents reviewed by bankers and brokers:  

  • Profit and loss 
  • Balance sheet 
  • Accounts receivable 
  • Accounts payable\work in process 
  • Tax returns  
  • A list of assets  


Owners and managers should find an expert to help them prepare their financials and market their business. Our guide Selling for Optimal Value: How to Prepare Your Business for Sale provides guidance in each of the following six areas to help prepare a business for sale: 

  • Marketability 
  • Financials 
  • Broker Relationship 
  • Financing 
  • Contracts 
  • Finding a Match 

Get the Guide