{"ok":true,"canonical_url":"https://dealroom.so/glossary/adjusted-net-operating-income","api_url":"https://dealroom.so/api/public/glossary/adjusted-net-operating-income","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"adjusted-net-operating-income","term":"Adjusted Net Operating Income","group":"Reading the business","definition":"The earnings of a business, adjusted for non-recurring expenses, owner's salary, and other non-operational items. This is the true earnings power for a new owner.","what_it_means":"Lenders and buyers use Adjusted Net Operating Income (or SDE/EBITDA) to understand the business's true profitability and its ability to cover new debt. You'll add back discretionary owner expenses, one-time costs, and excessive salaries to the reported net income. This is the foundation for calculating DSCR.","url":"https://dealroom.so/glossary/adjusted-net-operating-income","official_sources":[],"related":[{"slug":"sde","term":"SDE","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","term":"EBITDA","url":"https://dealroom.so/glossary/ebitda"},{"slug":"add-backs","term":"Add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"dscr","term":"DSCR","url":"https://dealroom.so/glossary/dscr"}],"related_questions":[{"question":"How are variable interest rates for SBA 7(a) loans typically determined and adjusted?","url":"https://dealroom.so/sba-7a/questions/how-are-variable-interest-rates-for-sba-7-a-loans-typically-determined-and-adjusted"},{"question":"What is the specific personal net worth threshold that triggers a personal guaranty requirement for an owner?","url":"https://dealroom.so/sba-7a/questions/what-is-the-specific-personal-net-worth-threshold-that-triggers-a-personal-guaranty-requir"},{"question":"Can I use an SBA 7(a) loan to purchase a business with a negative net worth?","url":"https://dealroom.so/sba-7a/questions/can-i-use-an-sba-7-a-loan-to-purchase-a-business-with-a-negative-net-worth"},{"question":"Can an SBA 7(a) loan be used to purchase a business with a negative net worth?","url":"https://dealroom.so/sba-loans/basics/can-an-sba-7-a-loan-be-used-to-purchase-a-business-with-a-negative-net-worth"},{"question":"What if the acquired business primarily generates revenue from passive rental income?","url":"https://dealroom.so/sba-7a/questions/what-if-the-acquired-business-primarily-generates-revenue-from-passive-rental-income"},{"question":"What constitutes \"passive income\" disqualifying a business from 7(a) loan eligibility?","url":"https://dealroom.so/for-lenders/questions/what-constitutes-passive-income-disqualifying-a-business-from-7-a-loan-eligibility"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Adjusted Net Operating Income","url":"https://dealroom.so/glossary/adjusted-net-operating-income","source_type":"DealRoom Data"}}