Glossary · Reading the business
In short
An expense not allowed for tax deduction or, in valuation, one a buyer wouldn't incur. It's an "add-back" to show true profitability.
In an acquisition, a disallowed expense typically refers to an "add-back" that your accountant identifies during due diligence. These are non-recurring or discretionary expenses of the seller (e.g., excessive owner salary, personal travel) that a new owner wouldn't have. Adjusting for these gives you a more accurate picture of the business's true profitability (SDE/EBITDA).
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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