Glossary · Reading the business
In short
These are the past financial statements of the business, usually for the last three years. Buyers analyze them to understand the business's past performance and predict future profitability.
Lenders will scrutinize the Profit and Loss Statement and Balance Sheet from the past three years, often requiring IRS transcripts (4506-T) to verify. Your due diligence must go beyond what the seller provides; look for add-backs and understand the SDE to grasp the true owner earnings.
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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