The Q1 Deal Financing Checklist

1. Get Your Financials Lender-Ready

This is where most buyers stumble out of the gate. You find the right deal, sign the LOI, and then spend two weeks tracking down paperwork while the seller wonders if you're actually serious.

What lenders need from you personally:

• Personal financial statement. Current, not six months old. List all assets, liabilities, and your net worth. Lenders have their own forms, but having your numbers ready speeds everything up.

• Two years of personal tax returns. That means 2023 and 2024. If you're closing in Q1 2026, lenders may also want preliminary 2025 financials. Talk to your CPA now about what you can provide and when.

• Liquidity documentation. Bank statements and brokerage statements showing where your equity injection is coming from. Lenders want to see these funds "seasoned," meaning they've been sitting in your accounts for 60-90 days. Moving money around in January creates questions you don't want to answer.

The goal is simple: when a lender asks for documentation, you send it the same day. That signals you're organized and serious.

2. Clean Up Your Credit

Your credit score matters more than most buyers expect, especially for deals under $5M where personal guarantees are standard.

Pull your report now through Annual Credit Report or a paid monitoring service. Don't wait until you're under LOI to discover a problem.

What lenders typically want to see:

• 650+ for most deals

• 700+ for competitive terms

• 700+ opens the most doors

Common issues that trip people up:

• Authorized user accounts with high balances (even if they're not yours)

• Recent hard inquiries from rate shopping (mortgage, auto, credit cards)

• Old collections you forgot about

• High utilization on existing credit lines

Some of these take 30-60 days to resolve. Others take longer. The point is you need time to fix them, and you won't have that time once a deal is moving.

3. Lock In Your Professional Team

The buyers who close deals fast have their team assembled before they need them. The ones who scramble are the ones who lose deals.

CPA: You need someone who can turn around tax returns and financial statements quickly. If your CPA's standard timeline is "sometime in March," that's a problem for Q1 deals. Have the conversation now about expedited timelines and what that costs.

Attorney: You want M&A experience, not a generalist. Your family lawyer or the attorney who did your house closing isn't the right fit. Ask for referrals from other buyers or brokers in your space.

Insurance broker: SBA and acquisition financing have specific insurance requirements. Business interruption, key man life insurance, sometimes collateral coverage. An experienced broker knows what lenders ask for and can get quotes quickly.

Waiting until you have a signed LOI to start these conversations costs you 2-3 weeks minimum. On a 60-day close timeline, that's a significant chunk.

4. Build Lender Relationships Before You Need Them

There's a difference between "shopping a deal" and "building relationships."

Shopping a deal means you have an LOI in hand and you're calling every lender who will listen, hoping someone says yes. It works, but it's reactive.

Building relationships means reaching out to lenders before you have a specific deal. Sharing your target criteria, your background, how much equity you can inject, and what industries you're focused on.

Why this matters:

• Lenders remember you when you come back with a real deal

• You learn what each lender actually wants (not just what their website says)

• You can move faster because you've already done the intro calls

• For deals over $5M, this is even more critical since the lender pool is smaller

Talk to 3-5 lenders in December. Not to pitch a deal, but to introduce yourself and understand their appetite. Or talk to an experienced loan broker with hundreds of lender relationships, like us at CapFlow. When January comes and you're under LOI, you're not starting from zero.

5. Get Clear on Your Equity Story

Lenders will want to know exactly where your down payment is coming from. Vague answers create delays and sometimes kill deals.

Sources that work cleanly:

• Cash in savings or brokerage accounts (seasoned 60-90 days)

• Retirement account rollovers (ROBS structure, needs advance setup)

• Home equity line of credit (if already in place)

• Committed investor or partner capital (with written confirmation)

Sources that create questions:

• Recent large deposits without documentation

• Gift funds from family (requires gift letters, sometimes disqualified)

• Crypto or other alternative assets (liquidation and seasoning required)

• Pledged assets you don't actually own yet

If you're bringing in partners or outside investors, get their commitment in writing now. A verbal "yes" in December becomes "let me think about it" in February when you actually need the wire.

6. Know Your Target Criteria

This one sounds basic, but vague buyers waste everyone's time, including their own.

Get specific:

• Size range: What EBITDA or revenue range are you targeting?

• Industry: What sectors do you know, and what's off limits?

• Geography: Are you relocating, or does it need to be within driving distance?

• Deal breakers: Customer concentration above 25%? Heavy owner dependency? Declining revenue? Know your walk-away points.

The clearer you are, the faster brokers and lenders can help you. "I'm looking for a business" gets you nowhere. "I'm looking for a $1-3M EBITDA services business in the Southeast, no customer concentration above 20%, with an owner willing to stay on for 6 months" gets you real opportunities.

The Bottom Line

The buyers who close deals in Q1 aren't the ones who started looking in January. They're the ones who spent December getting their house in order.

Lenders move faster when you're organized. Sellers take you more seriously when you're prepared. And you avoid the scramble that kills deals or forces you to accept worse terms.

Use the end of the year wisely. When January comes, you'll be ready to move.

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