Glossary · Reading the business
In short
When a business's total liabilities exceed its total assets, indicating financial distress. This is a major red flag for lenders and signals potential insolvency.
An SBA lender will scrutinize a business with negative net worth very carefully, as it signals severe financial issues. While some asset-light businesses might appear this way, you'll need a compelling turnaround strategy and strong cash flow projections to convince a lender it's a viable acquisition.
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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