Glossary · Reading the business
In short
To capitalize means to record an expenditure as an asset on the balance sheet rather than an expense, spreading its cost over its useful life. This affects a business's reported profit.
When buying a business, understanding what the seller capitalized versus expensed is crucial for assessing true profitability and future cash flow. Major purchases like equipment or significant leasehold improvements are often capitalized. Your accountant will help you determine how to capitalize assets post-acquisition, impacting your depreciation and taxable income.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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