{"ok":true,"canonical_url":"https://dealroom.so/glossary/owner-s-draw","api_url":"https://dealroom.so/api/public/glossary/owner-s-draw","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":"owner-s-draw","term":"Owner's draw","group":"Reading the business","definition":"Funds taken out of a business by its owner, often from a sole proprietorship or partnership, not typically reported as a salary. Buyers care because this represents discretionary owner compensation that can be adjusted to improve cash flow.","what_it_means":"For valuation purposes, owner's draws are typically added back to derive SDE or EBITDA, as they are part of the owner's discretionary earnings. You need to understand how much the current owner is taking out and how that impacts the business's reported profit. Your personal compensation will replace this post-acquisition.","url":"https://dealroom.so/glossary/owner-s-draw","official_sources":[],"related":[{"slug":"sde","term":"SDE","url":"https://dealroom.so/glossary/sde"},{"slug":"ebitda","term":"EBITDA","url":"https://dealroom.so/glossary/ebitda"},{"slug":"add-backs","term":"Add-backs","url":"https://dealroom.so/glossary/add-backs"},{"slug":"salary","term":"Salary","url":"https://dealroom.so/glossary/salary"}],"related_questions":[{"question":"How does a lender confirm an owner's U.S. citizenship if they were born in a U.S. territory or abroad to U.S. parents?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-confirm-an-owner-s-u-s-citizenship-if-they-were-born-in-a-u-s-territory-"},{"question":"How does the SBA verify a non-owner investor's funds used for equity injection?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-verify-a-non-owner-investor-s-funds-used-for-equity-injection"},{"question":"Can a business owner's personal assets be used as collateral if business assets are limited?","url":"https://dealroom.so/sba-loans/basics/can-a-business-owner-s-personal-assets-be-used-as-collateral-if-business-assets-are-limite"},{"question":"What specific documentation is required to verify a non-citizen owner's lawful permanent resident status?","url":"https://dealroom.so/for-lenders/questions/what-specific-documentation-is-required-to-verify-a-non-citizen-owner-s-lawful-permanent-r"},{"question":"How does the SBA handle a partner buyout where the remaining owner's experience is limited?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-handle-a-partner-buyout-where-the-remaining-owner-s-experience-is-limited"},{"question":"What specific documentation is required for a lender to verify U.S. citizenship if an owner was born in a U.S. territory or abroad to U.S. parents?","url":"https://dealroom.so/for-lenders/questions/what-specific-documentation-is-required-for-a-lender-to-verify-u-s-citizenship-if-an-owner"}]},"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 — Owner's draw","url":"https://dealroom.so/glossary/owner-s-draw","source_type":"DealRoom Data"}}