Glossary · Reading the business
In short
High leverage means a business relies heavily on debt to finance its operations or assets. While common in acquisitions, excessive leverage can signal higher risk and strain cash flow, impacting your ability to repay the SBA loan.
Your SBA loan will introduce new debt, increasing the business's overall leverage. Lenders evaluate this through metrics like Debt Service Coverage Ratio (DSCR) and overall leverage. If the business already has significant debt relative to its cash flow, or your deal makes it too leveraged, the lender might require a larger equity injection or a seller note on standby to mitigate risk.
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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