Glossary · Reading the business
In short
When a business's cash flow is insufficient to cover its debt payments. This is a critical red flag for lenders and indicates a high risk of default.
If your pro forma cash flow analysis shows negative debt service coverage (DSCR below 1.0), it means the business isn't projected to generate enough cash to pay its loan obligations. This is a deal-killer for lenders, as it signals a high probability of default. You'll need to adjust your projections or deal structure to achieve a healthy DSCR before a loan can be approved.
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.
Free · No documents · Usually same-day