{"ok":true,"canonical_url":"https://dealroom.so/glossary/prepaid-expense","api_url":"https://dealroom.so/api/public/glossary/prepaid-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":"prepaid-expense","term":"Prepaid Expense","group":"Reading the business","definition":"Payments made by the business for goods or services it will receive in the future, like insurance premiums or rent paid in advance. These are assets on the balance sheet.","what_it_means":"You'll see prepaid expenses on the Balance Sheet. During due diligence, verify these assets are legitimate and transferable to you post-acquisition. For instance, ensure any prepaid rent will benefit your lease agreement.","url":"https://dealroom.so/glossary/prepaid-expense","official_sources":[],"related":[{"slug":"balance-sheet","term":"Balance Sheet","url":"https://dealroom.so/glossary/balance-sheet"},{"slug":"working-capital","term":"Working capital","url":"https://dealroom.so/glossary/working-capital"}],"related_questions":[{"question":"Can I use prepaid expenses, like insurance premiums, as part of my equity injection?","url":"https://dealroom.so/sba-7a/questions/can-i-use-prepaid-expenses-like-insurance-premiums-as-part-of-my-equity-injection"},{"question":"Are prepaid rent or insurance expenses paid before closing considered part of the equity injection?","url":"https://dealroom.so/sba-7a/questions/are-prepaid-rent-or-insurance-expenses-paid-before-closing-considered-part-of-the-equity-i"},{"question":"Can a prepaid rent amount for the acquired business count towards my equity injection?","url":"https://dealroom.so/sba-7a/questions/can-a-prepaid-rent-amount-for-the-acquired-business-count-towards-my-equity-injection"},{"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"}]},"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 — Prepaid Expense","url":"https://dealroom.so/glossary/prepaid-expense","source_type":"DealRoom Data"}}