The 7(a) program’s flexibility is exactly what makes its projection-based credits demanding: when repayment rests on a forecast, the forecast must be independently tested.
The 7(a) program finances nearly everything the 504 cannot — working capital, business acquisitions, partner buyouts, leasehold improvements, equipment — and that breadth is why its underwriting leans so heavily on cash-flow analysis. Where the borrower has years of tax returns demonstrating coverage, the lender’s own spread suffices. Where the loan is underwritten on projections — a start-up, a change of ownership where the buyer will operate differently, an expansion that doubles capacity — SOP 50 10 expects those projections to be supported by independent analysis.
The recurring failure mode in 7(a) feasibility work is the borrower-built pro forma dressed up with a market-report cover. An underwriter can spot it in minutes: revenue assumptions unanchored to a defined trade area, expense ratios below every published benchmark, and no ramp — the business opens at stabilization. An independent study replaces each of those with evidence: demand quantified from the actual market, expenses benchmarked against RMA and industry data, and a stabilization curve the operator must actually climb.
The program’s 1.15x operating and 1.00x global coverage minimums bind hardest in years one and two, not at stabilization — which is why a credible study presents the full ten-year pro forma with stress cases rather than a single blended year. Global coverage in particular catches what operating coverage hides: the guarantor whose personal obligations consume the cushion the business appears to have.
Wert-Berater has prepared more than 1,280 SBA-accepted studies since 1998. The engagement most often comes from the borrower — with lender confirmation obtained before work begins, since banks, lenders, and CDCs apply differing rules — the determination is independent — favorable or not — and the report is formatted for direct inclusion in the credit file with every assumption stated and sourced.
President, Wert-Berater, Inc. — independent feasibility study consultants since 1998. More than 4,000 feasibility studies completed across all 50 states and internationally, evaluating $40.2 billion in project value for SBA, USDA, EB-5, conventional, and institutional financing decisions. Fiduciary duty runs to the lender and agency in every engagement.
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