{"ok":true,"canonical_url":"https://dealroom.so/glossary/debt-to-equity-ratio","api_url":"https://dealroom.so/api/public/glossary/debt-to-equity-ratio","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":"debt-to-equity-ratio","term":"Debt-to-equity ratio","group":"Reading the business","definition":"This financial ratio compares a company's total liabilities to its shareholder equity. It indicates how much debt a business uses to finance its assets relative to the value provided by owners.","what_it_means":"Lenders use the debt-to-equity ratio to assess a business's financial leverage and risk. A high ratio might indicate overleverage, making it harder to get an SBA loan. For an acquisition, they'll calculate this ratio for the pro forma business, including the new SBA loan and your equity injection, to ensure it meets prudent lending standards.","url":"https://dealroom.so/glossary/debt-to-equity-ratio","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"}],"related":[{"slug":"financial-leverage","term":"Financial leverage","url":"https://dealroom.so/glossary/financial-leverage"},{"slug":"overleverage","term":"Overleverage","url":"https://dealroom.so/glossary/overleverage"},{"slug":"equity-injection","term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"balance-sheet","term":"Balance Sheet","url":"https://dealroom.so/glossary/balance-sheet"}],"related_questions":[{"question":"What is the debt-to-worth ratio requirement for a $0-down partner buyout?","url":"https://dealroom.so/sba-7a/questions/what-is-the-debt-to-worth-ratio-requirement-for-a-0-down-partner-buyout"},{"question":"What if my personal debt-to-income ratio is high, even with a good credit score?","url":"https://dealroom.so/sba-7a/questions/what-if-my-personal-debt-to-income-ratio-is-high-even-with-a-good-credit-score"},{"question":"What if I have a high debt-to-income ratio personally, even with a good credit score?","url":"https://dealroom.so/sba-7a/questions/what-if-i-have-a-high-debt-to-income-ratio-personally-even-with-a-good-credit-score"},{"question":"Does the SBA require a specific debt service coverage ratio (DSCR) for approval?","url":"https://dealroom.so/sba-7a/questions/does-the-sba-require-a-specific-debt-service-coverage-ratio-dscr-for-approval"},{"question":"When is a debt service coverage ratio waiver or exception possible for an acquisition?","url":"https://dealroom.so/for-lenders/questions/when-is-a-debt-service-coverage-ratio-waiver-or-exception-possible-for-an-acquisition"},{"question":"How does a seller note on full standby affect the debt service coverage ratio calculation?","url":"https://dealroom.so/sba-7a/questions/how-does-a-seller-note-on-full-standby-affect-the-debt-service-coverage-ratio-calculation"}]},"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 — Debt-to-equity ratio","url":"https://dealroom.so/glossary/debt-to-equity-ratio","source_type":"DealRoom Data"}}