{"ok":true,"canonical_url":"https://dealroom.so/glossary/capitalize","api_url":"https://dealroom.so/api/public/glossary/capitalize","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":"capitalize","term":"Capitalize","group":"Reading the business","definition":"To capitalize means to record an expenditure as an asset on the balance sheet rather than an expense, spreading its cost over its useful life. This affects a business's reported profit.","what_it_means":"When buying a business, understanding what the seller capitalized versus expensed is crucial for assessing true profitability and future cash flow. Major purchases like equipment or significant leasehold improvements are often capitalized. Your accountant will help you determine how to capitalize assets post-acquisition, impacting your depreciation and taxable income.","url":"https://dealroom.so/glossary/capitalize","official_sources":[],"related":[{"slug":"balance-sheet","term":"Balance Sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"useful-life","term":"Useful life","url":"https://dealroom.so/glossary/useful-life"},{"slug":"leasehold-improvement","term":"Leasehold improvement","url":"https://dealroom.so/glossary/leasehold-improvement"},{"slug":"asset-purchase","term":"Asset purchase","url":"https://dealroom.so/glossary/asset-purchase"}],"related_questions":[{"question":"For a seller note on full standby, is it permissible for the accrued interest to capitalize or compound during the SBA 7(a) loan term?","url":"https://dealroom.so/for-lenders/questions/for-a-seller-note-on-full-standby-is-it-permissible-for-the-accrued-interest-to-capitalize"}]},"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 — Capitalize","url":"https://dealroom.so/glossary/capitalize","source_type":"DealRoom Data"}}