{"ok":true,"canonical_url":"https://dealroom.so/glossary/discretionary-expenses","api_url":"https://dealroom.so/api/public/glossary/discretionary-expenses","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":"discretionary-expenses","term":"Discretionary expenses","group":"Reading the business","definition":"These are non-essential business costs that an owner chooses to incur, often for personal benefit, which can be eliminated or reduced without harming operations.","what_it_means":"Identifying and \"adding back\" discretionary expenses is crucial for calculating a business's true owner benefit or Adjusted EBITDA. Your CPA will help you scrutinize expenses like excessive travel, personal vehicles, or non-business related salaries to adjust the profit for a buyer.","url":"https://dealroom.so/glossary/discretionary-expenses","official_sources":[],"related":[{"slug":"adjusted-ebitda","term":"Adjusted EBITDA","url":"https://dealroom.so/glossary/adjusted-ebitda"},{"slug":"add-backs","term":"Add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"tax-returns","term":"Tax returns","url":"https://dealroom.so/glossary/tax-returns"},{"slug":"cpa","term":"CPA","url":"https://dealroom.so/glossary/cpa"}],"related_questions":[{"question":"What kind of everyday expenses can working capital cover?","url":"https://dealroom.so/sba-loans/basics/what-kind-of-everyday-expenses-can-working-capital-cover"},{"question":"Which pre-closing business expenses can count towards equity?","url":"https://dealroom.so/sba-7a/questions/which-pre-closing-business-expenses-can-count-towards-equity"},{"question":"Can working capital be used for unexpected business expenses after closing?","url":"https://dealroom.so/sba-7a/questions/can-working-capital-be-used-for-unexpected-business-expenses-after-closing"},{"question":"Can I use SBA 7(a) loan funds for personal expenses?","url":"https://dealroom.so/sba-loans/basics/can-i-use-sba-7-a-loan-funds-for-personal-expenses"},{"question":"What types of expenses can an SBA 7(a) loan cover?","url":"https://dealroom.so/sba-loans/basics/what-types-of-expenses-can-an-sba-7-a-loan-cover"},{"question":"What duration of post-acquisition operating expenses can working capital typically cover?","url":"https://dealroom.so/sba-7a/questions/what-duration-of-post-acquisition-operating-expenses-can-working-capital-typically-cover"}]},"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 — Discretionary expenses","url":"https://dealroom.so/glossary/discretionary-expenses","source_type":"DealRoom Data"}}