{"ok":true,"canonical_url":"https://dealroom.so/glossary/profit-margin","api_url":"https://dealroom.so/api/public/glossary/profit-margin","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":"profit-margin","term":"Profit margin","group":"Reading the business","definition":"The percentage of revenue that turns into profit after expenses. A healthy profit margin indicates efficient operations and pricing power, which is critical for debt service.","what_it_means":"Analyze gross profit margin (revenue minus cost of goods sold) and net profit margin (after all expenses, including taxes). High margins provide a buffer for unexpected costs and make the business more resilient. Low margins mean you have less room for error and greater sensitivity to revenue fluctuations.","url":"https://dealroom.so/glossary/profit-margin","official_sources":[],"related":[{"slug":"ebitda","term":"EBITDA","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","term":"SDE","url":"https://dealroom.so/glossary/sde"},{"slug":"owner-earnings","term":"Owner earnings","url":"https://dealroom.so/glossary/owner-earnings"},{"slug":"cash-flow-after-debt-service","term":"Cash flow after debt service","url":"https://dealroom.so/glossary/cash-flow-after-debt-service"}],"related_questions":[{"question":"Can a non-profit organization with a for-profit subsidiary be eligible for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-non-profit-organization-with-a-for-profit-subsidiary-be-eligible-for-a-7-a-loan"},{"question":"Can a non-profit organization receive an SBA 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-non-profit-organization-receive-an-sba-7-a-loan"},{"question":"Does my business need to be a for-profit company to qualify?","url":"https://dealroom.so/sba-loans/basics/does-my-business-need-to-be-a-for-profit-company-to-qualify"},{"question":"Can a non-profit organization qualify for an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/can-a-non-profit-organization-qualify-for-an-sba-7-a-loan"},{"question":"Can a non-profit organization receive an SBA 7(a) loan for their activities?","url":"https://dealroom.so/sba-loans/basics/can-a-non-profit-organization-receive-an-sba-7-a-loan-for-their-activities"},{"question":"Can a business that is not for profit receive an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/can-a-business-that-is-not-for-profit-receive-an-sba-7-a-loan"}]},"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 — Profit margin","url":"https://dealroom.so/glossary/profit-margin","source_type":"DealRoom Data"}}