Glossary · Reading the business
In short
This measures a business's ability to generate enough cash to cover its debt payments and other obligations. It's a critical indicator of financial health for lenders.
Lenders analyze cash flow coverage using metrics like DSCR (Debt Service Coverage Ratio) or Cash Flow After Debt Service. The SBA requires a minimum DSCR of 1.15:1 for most 7(a) loans. You need to demonstrate strong, consistent cash flow from the business to comfortably make your loan payments and operate.
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
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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