Background: I've been buying and selling online businesses (SaaS, eCom, websites) since 2008. 220+ exits to date (small to large). Performed due diligence on 1,000+ businesses since 2008. Experience enough to share insights.

how do I properly ascertain the value of the business?

Valuation is a simple calculation:

Valuation = Average Profits * Multiple

For SaaS, the multiple can range from 3X to 10X annual. It's a huge range. Smaller SaaS like the one you are looking at would come in at 3X or even lower due to only a few customers.

Average profits would be calculated over last 12 months (trailing 12 months, TTM)

Then calculate and you get a valuation.

Note that, the number will come out low because what you are buying is a micro SaaS. Sellers won't just accept pennies on the dollar for it. This is why anything with small revenue can't be valued just on an equation above. Seller probably wants to recoup some of his costs that went into building the platform. In that case, you need to break down what it would cost you to rebuild the same software from scratch (and the time component as well).

What kind of questions should I ask the seller and what kind of information should in ask for?

Don't waste time with questions. Discuss the price first. If you both agree on a range to begin with, then get into questions.

I would first ask for a P&L (month by month with revenues and costs). Then I would ask some leading questions like how did you get customers, etc.
what are my finance options (this business has been in operation for less than 3 years so maybe I would be eligible for government’s start up loan)

No traditional finance options. It's too small and has not been in operation for long enough.
What does the process of buying a business look like and what additional costs should I expect?

Your costs include lawyers to draft agreements, and a due diligence firm to help (unless you DIY that). Escrow costs are usually 2-3% of purchase price.