
Personal Expense Add-Backs in SBA Loan Deals
Personal expense add-backs play a critical role in SBA loan deals by adjusting financial statements to reflect a business’s true earnings. Properly documented add-backs—such as personal vehicle costs, owner perks, and one-time expenses—can increase Seller’s Discretionary Earnings (SDE), improve valuations, and strengthen the Debt Service Coverage Ratio (DSCR) needed for loan approval. However, poorly supported add-backs can trigger lender scrutiny, lower valuations, and even cause loan denials, making accurate documentation essential for buyers and sellers alike.


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