{"ok":true,"canonical_url":"https://dealroom.so/glossary/overleveraged","api_url":"https://dealroom.so/api/public/glossary/overleveraged","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":"overleveraged","term":"Overleveraged","group":"Reading the business","definition":"A business or individual is overleveraged when they have taken on too much debt relative to their income, assets, or equity. This creates a high risk of default.","what_it_means":"A business may appear overleveraged if its historical cash flow doesn't comfortably cover its existing debt plus your new SBA loan. Lenders will flag this through ratios like DSCR. As a buyer, ensure the post-acquisition capital structure isn't setting the business up for failure.","url":"https://dealroom.so/glossary/overleveraged","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":"dscr","term":"DSCR","url":"https://dealroom.so/glossary/dscr"},{"slug":"repayment-ability","term":"Repayment Ability","url":"https://dealroom.so/glossary/repayment-ability"},{"slug":"global-cash-flow","term":"Global cash flow","url":"https://dealroom.so/glossary/global-cash-flow"},{"slug":"overall-leverage","term":"Overall Leverage","url":"https://dealroom.so/glossary/overall-leverage"}],"related_questions":[]},"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 — Overleveraged","url":"https://dealroom.so/glossary/overleveraged","source_type":"DealRoom Data"}}