{"ok":true,"canonical_url":"https://dealroom.so/glossary/operational-expense","api_url":"https://dealroom.so/api/public/glossary/operational-expense","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":"operational-expense","term":"Operational Expense","group":"Reading the business","definition":"These are the ongoing costs of running a business, such as rent, salaries, and utilities. Buyers must scrutinize operational expenses to accurately project future profitability and cash flow.","what_it_means":"During due diligence, meticulously review the seller's Profit and Loss Statements to identify all operational expenses. Pay close attention to any \"add-backs\" proposed by the seller, ensuring they are truly non-recurring or discretionary and won't be part of your ongoing costs.","url":"https://dealroom.so/glossary/operational-expense","official_sources":[],"related":[{"slug":"profit-and-loss-statement","term":"Profit and Loss Statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"add-backs","term":"Add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"ebitda","term":"EBITDA","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","term":"SDE","url":"https://dealroom.so/glossary/sde"}],"related_questions":[{"question":"How does business overhead expense insurance differ from key-person life insurance?","url":"https://dealroom.so/sba-7a/questions/how-does-business-overhead-expense-insurance-differ-from-key-person-life-insurance"},{"question":"Is working capital from an SBA loan available immediately at closing for operational expenses and payroll?","url":"https://dealroom.so/sba-7a/questions/is-working-capital-from-an-sba-loan-available-immediately-at-closing-for-operational-expen"},{"question":"Are day-to-day operational expenses like rent or utilities an allowed use of SBA 7(a) loan funds?","url":"https://dealroom.so/sba-loans/basics/are-day-to-day-operational-expenses-like-rent-or-utilities-an-allowed-use-of-sba-7-a-loan-"},{"question":"Can an SBA 7(a) loan include funds for operational expenses like payroll and utilities for the first few months after acquisition?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-include-funds-for-operational-expenses-like-payroll-and-utilities-for-"},{"question":"Can I use the working capital portion of my SBA 7(a) loan to cover unexpected operational expenses during the first six months?","url":"https://dealroom.so/sba-7a/questions/can-i-use-the-working-capital-portion-of-my-sba-7-a-loan-to-cover-unexpected-operational-e"},{"question":"What if the franchisor requires specific operational changes that impact the business's profitability?","url":"https://dealroom.so/sba-7a/questions/what-if-the-franchisor-requires-specific-operational-changes-that-impact-the-business-s-pr"}]},"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 — Operational Expense","url":"https://dealroom.so/glossary/operational-expense","source_type":"DealRoom Data"}}