{"ok":true,"canonical_url":"https://dealroom.so/glossary/capacity","api_url":"https://dealroom.so/api/public/glossary/capacity","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":"capacity","term":"Capacity","group":"Reading the business","definition":"One of the \"5 Cs of Credit,\" referring to the borrower's ability to repay the loan from the business's cash flow. It's the most critical factor for an SBA lender.","what_it_means":"The lender primarily evaluates the business's historical and projected cash flow to determine if it can cover all operating expenses and debt service. They look at your Debt Service Coverage Ratio (DSCR) and global cash flow, including personal income. If the business can't generate enough cash, the deal won't get funded.","url":"https://dealroom.so/glossary/capacity","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"5-cs","term":"5 Cs","url":"https://dealroom.so/glossary/5-cs"},{"slug":"cash-flow","term":"Cash flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"dscr","term":"DSCR","url":"https://dealroom.so/glossary/dscr"},{"slug":"repayment-capacity","term":"Repayment capacity","url":"https://dealroom.so/glossary/repayment-capacity"}],"related_questions":[{"question":"How does an SBA 7(a) loan typically handle seasonal businesses for repayment capacity?","url":"https://dealroom.so/sba-7a/questions/how-does-an-sba-7-a-loan-typically-handle-seasonal-businesses-for-repayment-capacity"}]},"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 — Capacity","url":"https://dealroom.so/glossary/capacity","source_type":"DealRoom Data"}}