The most common question I don't get asked on a first call is: "Is my situation actually ready for this?" Here's how to answer it yourself.
Operators call us at all different stages of readiness. Some are fully prepared — three years of organized financials, clean real estate, clear capital need, adequate coverage. Those calls move quickly. Some are clearly not ready — declining EBITDA, coverage below floor, no clear use for the capital. Those calls end quickly.
But the most common call is somewhere in the middle. An operator whose coverage is close but not quite there. One with a strong business and strong real estate, but a messy financial picture that needs 90 days of accounting work to present cleanly. One with coverage that works today but didn't work 18 months ago and the trend is still establishing itself.
These operators want to know: should I pursue this now, or work on a specific thing and call back in 12 months?
Here's the honest framework.
The variables that determine fundability
Variable 1: Rent coverage — the gating factor
Coverage is the one variable that can't be worked around at closing. If your unit-level EBITDA doesn't produce adequate rent coverage at market pricing for your property, the deal doesn't work regardless of how strong everything else is.
Fundable now: Coverage at or above floor (2x default, 1.5x for QSR/restaurant, 3x+ for industrial) on a trailing 12-month basis, with a flat or improving trend over the prior two years.
Fundable in 12 months: Coverage that is below floor on a trailing 12-month basis but trending toward the threshold. If your trailing 12-month coverage is 1.7x and your most recent six months of data produces 2.1x annualized, the trend is your argument. Twelve months of continued improvement moves you into range.
Not yet fundable (longer runway): Coverage in consistent three-year decline. This isn't a timing issue — it's a business model issue. The gap isn't closeable by waiting 12 months.
Variable 2: EBITDA trend direction
Rent coverage tells me where you are today. The trend tells me where you're going.
Fundable now: Stable or improving EBITDA over three years. A bad year that's explainable as an outlier (COVID year, remodel year, significant one-time event) doesn't disqualify — it requires explanation.
Fundable in 12 months: A trend that is just beginning to recover from a trough. If EBITDA declined for two years and has now shown two quarters of improvement, 12 months of continued recovery establishes a trend. One quarter of improvement is a data point, not a trend.
Not yet fundable: Consistent three-year decline with no identifiable catalyst for reversal.
Variable 3: Financial documentation quality
This one is purely a preparation issue — it doesn't reflect on the business, just on how organized the records are.
Fundable now: Three years of unit-level P&L available, ideally already segregated by location. Tax returns available and reconcilable to the P&Ls. Monthly detail available for the trailing 12 months.
Fundable in 60 days: Strong business, complete records, but they haven't been organized or unit-level disaggregation hasn't been done. Two to four weeks of accounting work to produce a clean package. This doesn't move the timeline significantly — it's 30-45 day diligence anyway.
Adds 90+ days: Records that require reconstruction from POS systems, bank statements, and invoices because the accounting system wasn't set up to track by location. Doable, but the timeline impact is real.
Variable 4: Real estate condition
Property condition affects diligence, not fundability — unless there are deferred maintenance issues severe enough to require price adjustment or lease structure modification.
Fundable now: Property in reasonable condition. No known environmental issues. Buildings of reasonable age with adequate remaining useful life on major systems.
Requires disclosure upfront: Known deferred maintenance, aging HVAC or roof, prior environmental activity. None of these are deal-killers — but they need to be disclosed before the LOI is signed, not discovered in week four of diligence. Early disclosure allows the purchase price or lease structure to accommodate the condition; late discovery creates renegotiation pressure.
Affects fundability: Significant environmental contamination requiring remediation, structural issues, or regulatory violations that prevent occupancy. These need resolution before an SLB is viable.
Variable 5: Capital use clarity
This variable affects our confidence in the relationship more than the mechanical fundability of the deal. An operator with a clear growth plan — specific locations, specific capital need, specific timeline — is a more compelling credit story than one with undefined plans for the proceeds.
Fundable now: Clear use of proceeds — two new locations, remodel program, working capital reserve to replace SBA covenant constraints. The story is specific.
Improves with time: Growth plan that is forming but not yet specific. "We want to open more locations but haven't identified the sites" — this isn't a disqualifier, but the conversation will be more productive when the plan is more concrete.
The 12-month action plan for "not quite yet" operators
If you've run through the variables above and your honest assessment is "close but not quite," here's the specific work to do over the next 12 months:
If coverage is the gap (1.5-1.7x when you need 2x): Focus on unit-level margin improvement before the SLB. Labor efficiency, menu/service mix optimization, occupancy cost management on leased locations. Every tenth of a coverage point you add is real — it's the difference between a deal that works and one that doesn't.
If the EBITDA trend is the gap (good coverage, but the trend isn't established): Give it time. Twelve months of improvement from a trough is a compelling trend. Six months isn't enough. Run the business well for 12 months, then call.
If documentation is the gap: Fix your accounting now. Engage your accountant to set up location-level coding in your accounting system so that next year's P&L is already disaggregated by unit. This is a one-time setup cost that pays back in deal velocity when you're ready.
If condition is the gap: Invest in the property. A new roof, an HVAC replacement, addressing known environmental concerns — these costs are recoverable in the purchase price if the work is done before the SLB rather than discovered during diligence.
The honest answer on timing
The operators who wait too long to have this conversation are the ones who spend 12 months working on things they could have started working on 12 months earlier — if they'd known what the gap was.
The point of an early call isn't to pursue a deal before you're ready. It's to know precisely what "ready" looks like so you can work toward it deliberately instead of guessing.
If you think you might be close but aren't sure, that's the right moment to call.
Not sure if you're fundable now or fundable in 12 months? That's exactly the question the first call answers. I'll tell you directly — including what you'd need to change and by when.