{"ok":true,"canonical_url":"https://dealroom.so/glossary/leverage-ratio","api_url":"https://dealroom.so/api/public/glossary/leverage-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":"leverage-ratio","term":"Leverage ratio","group":"Reading the business","definition":"This financial metric measures how much a business relies on debt to finance its assets. A high ratio indicates higher financial risk.","what_it_means":"Lenders use leverage ratios to assess the financial health of the business you're acquiring and its ability to take on new debt. A common ratio is Total Debt to EBITDA. A high ratio might concern a lender, indicating the business could struggle with repayment, so understand the target business's current and projected leverage.","url":"https://dealroom.so/glossary/leverage-ratio","official_sources":[],"related":[{"slug":"ebitda","term":"EBITDA","url":"https://dealroom.so/glossary/ebitda"},{"slug":"total-project-costs","term":"Total project costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"debt-service","term":"Debt service","url":"https://dealroom.so/glossary/debt-service"},{"slug":"global-cash-flow","term":"Global cash flow","url":"https://dealroom.so/glossary/global-cash-flow"}],"related_questions":[{"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":"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":"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"},{"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 level of debt service coverage ratio (DSCR) does an SBA 7(a) lender typically look for?","url":"https://dealroom.so/sba-7a/questions/what-level-of-debt-service-coverage-ratio-dscr-does-an-sba-7-a-lender-typically-look-for"}]},"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 — Leverage ratio","url":"https://dealroom.so/glossary/leverage-ratio","source_type":"DealRoom Data"}}