Glossary · Reading the business
In short
This is an accounting method that spreads the cost of a tangible asset over its useful life, reducing its book value over time. It's a non-cash expense that impacts reported profits but not the actual cash flow of the business.
When analyzing a business's Profit and Loss Statement, depreciation is often added back to net income to calculate cash flow metrics like SDE or EBITDA. Understand how depreciation affects the seller's reported profit and your true cash flow after debt service.
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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