Methodology

How the math on this site works

Every calculator and every mutable number on this site documents its assumptions. This page is the canonical reference.

Source registry

The full source registry is maintained in the project\'s research/sources.md file. The public-facing version of every claim links to the underlying government source. Key primary sources:

• U.S. Small Business Administration — 7(a) and 504 loan program rules, size standards, lender guidance.
• NYS Department of Taxation and Finance — sales/use tax, withholding, corporation tax, real-property transfer tax.
• NYS Business Express — entity formation, license lookup, common forms (DTF-17, NYS 100, DOS 1336, DOS 1239f, CE-200).
• NYS Department of State — corporation & business entity database, UCC-1 lien search.
• NYS Department of Labor — unemployment insurance registration, employer responsibilities.
• NYS Workers' Compensation Board — workers' comp, statutory disability, Paid Family Leave coverage.
• Empire State Development — the 10 official NYS economic-development regions; small business resources.
• U.S. Census Bureau — County Business Patterns (CBP) and ZIP Code Business Patterns (ZBP) for establishment counts; Annual Business Survey (ABS) for owner demographics.
• U.S. Bureau of Labor Statistics — QCEW (employment/wage benchmarks by county & industry); OEWS (wage benchmarks by occupation).

SDE Calculator — assumptions

See the SDE vs EBITDA guide for the full explainer.

The SDE Calculator on this site implements the standard small-business SDE reconstruction:

SDE = Net profit (operating income)
    + Owner's total compensation (salary, bonus, payroll taxes, benefits)
    + Interest expense
    + Depreciation & amortization
    + Discretionary, non-recurring, and personal expenses run through the business
    − Non-operating income unrelated to the business

What we include as add-backs: the items above, when they are clearly owner-discretionary or non-recurring.

What we do NOT include as add-backs: ongoing capex required to maintain revenue (this is a real expense); owner family members on payroll whose roles are real; one-time revenue spikes; personal expenses that the buyer will personally bear post-close (these reduce real SDE).

Important: SBA 7(a) lenders and Quality of Earnings (QoE) analysts reconstruct SDE their own way. The number this calculator produces is a starting point for buyer analysis, not the number a lender will use to underwrite your loan.

Affordability Calculator — assumptions

See the affordability guide for the full explainer.

The Affordability Calculator computes three numbers:

1. Buyer capacity — based on buyer cash, assumed buyer equity injection (default 10%, the SBA 7(a) minimum for goodwill-heavy deals), and reserves.
2. Business debt-service capacity — based on the target\'s SDE, less a replacement owner salary, less taxes, divided by a debt-service coverage ratio (DSCR). SBA 7(a) lenders typically require DSCR ≥ 1.15–1.25 for acquisition loans.
3. Lender-approved max — based on the SBA 7(a) max loan of $5,000,000 and a 10-year (or 25-year real-estate-backed) amortization at the SBA maximum rate. The actual rate a lender offers depends on Prime + a markup; we show a default rate but the user can adjust it.

What we exclude: seller financing as a substitute for the buyer\'s cash injection (SBA requires the buyer to have skin in the game); future growth projections (we use historical SDE only); working-capital loans separate from the acquisition loan.

Due diligence checklist — what\'s in, what\'s out

See the due diligence checklist for the full list.

The checklist is organized by track: Financial, Legal, Operational, NYS-specific, and Risk. Each item documents: what to request, who reviews it, and what a green/yellow/red outcome looks like. The list is not exhaustive for every industry — licensed and regulated businesses (food service, childcare, healthcare, professional services, transportation, alcohol, cannabis, etc.) require additional, profession-specific diligence that\'s flagged but not exhaustively covered in this initial version.

Retrieval dates and review cadence

Each source in the registry has a retrieved date and a next-review date. Pages with regulatory or rate claims are re-reviewed quarterly. Pages with stable facts (e.g., the list of NYS counties) are reviewed annually.

When a source publishes new annual data (for example, the next annual County Business Patterns release), we add a new dated entry to the registry rather than mutating the old one — so historical claims remain verifiable.