SBA 1.25x debt service coverage calculator for Amazon acquisitions
Under SBA SOP 50 10 8.1, effective October 1, 2026, an SBA-financed initial acquisition must show 1.25x debt service coverage on historical earnings, and projections cannot be used to reach it. This calculator tests a deal against that floor and shows the largest loan and purchase price the earnings support.
Run the numbers
Meets 1.25x
- Debt service coverage
- 2.30x
- Loan amount
- $1,305,000
- Annual debt service
- $211,308
- Largest loan at 1.25x
- $2,396,216
- Largest price at the same equity
- $2,662,462
Loan = price − equity − standby seller note. Annual debt service = the amortized monthly payment × 12. Coverage = SDE ÷ annual debt service. The largest loan is the one whose debt service the earnings cover exactly 1.25 times; the largest price keeps equity and the standby note at the same percentages.
Illustrative only. Lenders apply their own underwriting. Not financial advice.
Is the SDE real? Get it reconciled to the bank in 48 hours.
Request a reportWhat does SOP 50 10 8.1 change for the coverage test?
For an Initial Acquisition or an Owner Buyout, the lender must show debt service coverage of at least 1.25:1, using the last fiscal year-end or an average of the last two, on a historical or adjusted basis. The lender may look at post-closing projections but may not rely on them to meet the test. Under SOP 50 10 8 the general floor was 1.15:1, on a historical and/or projected basis.
Two other rules shape the numbers above. The minimum equity injection for an Initial Acquisition is 10% and cannot be reduced or eliminated. And when the deal includes other debt that is not on full standby and is structured as interest-only, the lender must apply an amortization of no more than 10 years to it.
Two worked examples
The home page example listing
Asking price and SDE as shown on the example listing card.
| Purchase price | $1,450,000 |
|---|---|
| SDE | $485,000 |
| Equity / standby note | 10% / 0% |
| Rate / term | 10.5% / 10 years |
| Loan | $1,305,000 |
| Annual debt service | $211,308 |
| Coverage | 2.30x: meets 1.25x |
| Largest loan at 1.25x | $2,396,216 |
| Largest price at 10% equity | $2,662,462 |
The same listing, if verified SDE came in at $250,000
A hypothetical: what happens to coverage when reconciled earnings are lower than the listing says.
| Purchase price | $1,450,000 |
|---|---|
| SDE | $250,000 |
| Equity / standby note | 10% / 0% |
| Rate / term | 10.5% / 10 years |
| Loan | $1,305,000 |
| Annual debt service | $211,308 |
| Coverage | 1.18x: below 1.25x |
| Largest loan at 1.25x | $1,235,163 |
| Largest price at 10% equity | $1,372,403 |
The second example is the reason the test matters before exclusivity: the listing does not change, only the earnings that survive reconciliation, and the deal moves from comfortably financeable on paper to below the floor. See what a reconciliation looks like in the sample report.