Your Buyer Loves the Business. Can the Bank Love the Numbers?
September 9, 2026
You have a buyer. They like the business, the price looks promising, and you can almost picture the celebratory dinner. Then their lender starts asking questions. Suddenly, the most important number in the room is how much cash will be left to make the loan payments.
On September 2, 2026, the Bank of Canada held its overnight policy rate at 2.25%.[1] Our take: that gives buyers and sellers some near-term continuity when modelling a deal. It is no promise of future rates, and 2.25% is not the rate a buyer should expect on an acquisition loan.
For an owner considering a sale, the useful question is straightforward: can the business support the purchase and still have enough money to operate comfortably? The example below shows why $500,000 in earnings does not mean $500,000 is available for loan payments.
Illustration only. Coverage definitions and requirements vary by lender. All amounts are annual.
That $300,000 is a yearly payment budget. The loan amount it supports depends on the interest rate and repayment period. Existing debt payments would use up some of that budget, too. A steady policy rate helps anchor one assumption; it cannot carry the entire deal.
Lenders use earnings and cash flow measures to assess repayment capacity. EBITDA—earnings before interest, taxes, depreciation, and amortization—is a starting point. Taxes, capital spending, and cash tied up in operations affect the money available for debt service. Coverage tests provide a cushion between available cash and required payments.[2]
This is where a seller’s earnings adjustments face their first real test. An expense does not disappear simply because it has been labelled an “add-back.” If you manage the team, win the customers, and handle purchasing, somebody still has to do those jobs after closing. The model needs to allow for appropriate compensation, even if the buyer plans to roll up their sleeves.
Imagine two businesses reporting similar profits. One has dependable managers, repeat customers, and equipment that is up to date. The other needs the owner on call every weekend, a major equipment replacement, and a good deal of optimism. From our perspective, those differences deserve attention well before anyone debates the valuation multiple.
A buyer’s borrowing limit also does not automatically determine your business’s value. The price they can fund depends on their equity, available debt, and the money needed for closing costs and operations. A financing gap may call for more equity or a different deal structure. Seller financing can help in some transactions, but it leaves you with repayment risk after handing over the keys.
Owners have more control over preparation than over the next rate announcement. Support each earnings adjustment. Explain what replacing your work would cost. Identify upcoming equipment spending and seasonal cash needs. Show that customers and staff will stay through a transition. Then test whether the numbers still work if sales soften or borrowing costs rise.
Those steps give buyers and lenders something concrete to assess—and give you a better chance of discovering a financing problem before it becomes a last-minute price negotiation.
Before you plan the celebratory dinner, find out how your business looks from the other side of the financing desk. EVCOR helps business owners understand value, prepare for sale, and navigate the financial realities of getting a deal done. Let’s talk about what a buyer would be buying—and what it will take to get you to closing.
[1] Bank of Canada, September 2, 2026, policy rate decision.
[2] BDC, How much can I borrow for my business?
