The letter of intent is the most expensive signature in your sale, and it is not the buyer's. It is yours. Signing an LOI takes your business off the market for 60 to 90 days of exclusivity, and about half of agreed deals never make it out the other side. When one collapses, you do not get the months back. You get a stale listing, a market that wonders what the first buyer found, and the whole qualification process to run again.
Here is the part worth sitting with: most post-LOI blowups were visible pre-LOI. The buyer whose financing dies in month three usually could not document a down payment in month one. The buyer who gets cold feet usually had a spouse who was never on board. The buyer who re-trades the price in diligence usually re-traded something before you signed. The tells are ordinary and checkable; the discipline is checking them while you still hold the leverage, because the day you grant exclusivity is the day the leverage changes hands.
This scorecard is that check, run against the one buyer whose LOI is in front of you. Eighteen signals, four categories, and an honest read at the end. "Find out" is a legitimate answer; it becomes your agenda for the next conversation. When you are done, download the scorecard with your answers filled in, including the ask-before-you-sign list, and take it into that conversation.
The Buyer Vetting Scorecard
Answer for the one buyer whose LOI is in front of you. Your answers save in your browser and never leave this page.
Can they close?
Sixty to seventy percent of inquirers cannot afford what they inquire about. This section is where you find out which kind you have.
They have provided a buyer pre-qualification letter from an SBA lender, dated within the last 90 dayshard flag
A real letter means a lender has already reviewed their credit and capacity. Its absence means you are the first person testing whether they can borrow.
They have shown proof or a verifiable attestation of funds for the down payment, roughly 10 percent of your pricehard flag
The down payment is the one number no lender can finance around. Unverified, it is a promise; verified, it is a deal.
The down payment is their own money, not capital they are still raising from unnamed investors
"Raising it" means your closing depends on people you have never met deciding to fund someone else's purchase.
They shared a personal financial statement without resistance
Every SBA lender will require one. A buyer who balks at giving it to you will stall when the lender asks for far more.
Their personal debts and living costs leave room in a global DSCR test, and they know what that test is
Lenders underwrite the buyer's whole life, not just the business. A strong business plus an over-extended buyer still fails.
Will they follow through?
Post-LOI cold feet is one of the two places deals die. The predictors are visible before you sign.
Their spouse or partner has explicitly signed off on buying a businesshard flag
The SBA requires a spouse's signature on the personal guarantee in most cases. A partner hearing about the plan in month eight ends deals.
They have been searching for less than about 18 months, or can explain a longer search
Serial searchers exist. Years of looking with nothing signed is a pattern, and you are about to become part of it.
They can say specifically why this business, and the answer is not generic
"It looked interesting" is browsing. A real answer references your customers, your trade, or their own history.
They have told you about any previous LOIs and what happened to them
A buyer who walked from two deals in diligence will describe both as the seller's fault. Ask anyway; the pattern is the answer.
Their proposed timeline to close is realistic, roughly 60 to 90 days, not vague and not instant
"Whenever works" signals no urgency; "two weeks" signals no understanding. Both burn your exclusivity window.
Can they run it?
The lender underwrites this too. A buyer the lender will not credit with relevant experience is a financing risk wearing a person.
They have industry, trade, or management experience an SBA lender will credit
Experience is an underwriting factor, not a nicety. Lenders decline capable-seeming buyers over it.
They are realistic about the owner's actual hours and role in this business
A buyer who thinks they are purchasing passive income discovers the truth in diligence and either walks or reprices.
They have asked about employees, customers, and operations, not only the financials
Financials-only questions mean they are still shopping spreadsheets. Operational questions mean they are picturing Monday morning.
Their attorney and CPA are already identified or engaged
"I will find one after we agree" adds four to six weeks to diligence and injects two strangers into your deal at its most fragile point.
How do they behave?
Process behavior before the LOI is the best preview of diligence behavior after it. People do not become easier once they have exclusivity.
Their offer terms have stayed stable; nothing has been re-traded before diligence even openedhard flag
A buyer who moves the number twice before the LOI will move it again in month three, when it costs you the most.
They respond within a business day or two, consistently
Slow now means slow when the lender needs a document by Friday. Diligence runs on response time.
They respect the process: no pushing for customer names, employee contact, or site visits ahead of the LOI
A buyer who wants pre-LOI access to your crown jewels is either careless with confidentiality or not planning to need the LOI.
No pressure tactics: no exploding offers, no manufactured deadlines, no "sign this week"
Urgency theater is a substitute for a strong offer. Real buyers know diligence takes the time it takes.
The read
Answer the signals above
Work through each category. "Find out" is a legitimate answer; it becomes your question list for the next conversation.
0 of 18 answered · 0 red-flag points · 0 to find out
How to read the verdict
Grant exclusivity means the buyer has done the work: financing is verifiable, the people around them are on board, and their behavior has been consistent. Sign, and match their preparation with your own; a prepared seller and a prepared buyer is what a nine-month sale looks like.
Dig before you sign means something specific needs a direct conversation first. Most yellow flags are resolvable in a single honest exchange: a pre-qualification letter can be obtained in a week, a vague timeline can be pinned down, a spouse conversation can be had. The point is not to reject the buyer. It is to resolve the flag while asking costs you nothing, instead of discovering it in month three when it costs you the deal.
Keep the listing live means the pattern predicts a blown deal, and the polite decline is cheaper than the education. This is the hardest verdict to act on, because by the time an LOI arrives you are tired and the number looks good. That fatigue is exactly what a weak buyer's offer is priced against.
One category deserves a special word: the money. A buyer can be personable, motivated, and completely unfinanceable, and 60 to 70 percent of the people who inquire about a listing cannot afford it. The two hard flags in that section, the pre-qualification letter and the verified down payment, are covered in full in our guide on SBA pre-qualification. If you require one thing before any LOI, require those two documents.
Why the soft tells matter as much as the money
Financing failure and buyer cold feet are the two places agreed deals die, and only one of them is about money. Our guide on why deals fall through walks the full autopsy; the short version is that the second failure mode, the buyer's conviction eroding across three months of diligence, is predicted by the soft signals on this card. The unexplained multi-year search. The generic answer to "why this business." The partner who has not signed off. None of these disqualifies a buyer alone. Together, they are how you tell a buyer who is buying from a buyer who is still browsing, and it is also what a buyer's own advisors check from the other side; our guide on what buyers look for is the mirror image of this page.
Or let the platform run this for you
Only talk to buyers who have already passed the gate.
BizTender's deal room runs buyer gates before a conversation starts: identity, attestation of funds for the down payment, and financing readiness, verified up front. The scorecard above is what that process looks like done by hand. Either way, the standard is the same: nobody takes your business off the market on charm.
Common questions
Is it rude to ask a buyer for proof of funds before an LOI?
It is standard, and the buyers worth having expect it. Real estate settled this norm decades ago; nobody grants a house showing contingent on nothing. The workable framing: "Before I take the business off the market, I ask every buyer for the same two things, a lender pre-qualification and verification of the down payment." Uniform process removes the personal edge, and a buyer offended by symmetrical diligence is telling you how month three will go.
The buyer failed two or three signals. Should I walk away?
Not automatically. The scorecard separates hard flags from soft ones for exactly this reason. Missing paperwork is fixable in days; a stable buyer with an old pre-qualification letter is a yellow, not a red. The pattern to respect is accumulation, several soft flags across different categories, or any hard flag the buyer resists resolving. Resistance to resolution is the real signal.
What if it is the only offer I have?
This is when the scorecard earns its keep, because scarcity is exactly when sellers talk themselves into weak buyers. A bad LOI is not better than no LOI; it is no LOI plus three lost months plus a listing that returns to market stale. If the only offer scores red, the better move is usually to decline the exclusivity, keep the conversation warm, and address whatever is making the listing attract only one buyer, often the price. Our guide on how long a sale takes covers what a healthy buyer pipeline looks like.
Does any of this apply to a competitor or an employee buying the business?
The money section applies in full; insiders and competitors still finance deals, and their financing still fails. The commitment section changes shape: an employee's "why this business" answers itself, but the spouse question matters more, not less, because an insider purchase usually stretches a family's finances further. And with a competitor, the behavior section is where to look hardest, because a competitor who signs an LOI gains access to information that is valuable even if they never close.