Glossary · Reading the business
In short
This occurs when a business's current liabilities exceed its current assets. It signals that the business may struggle to meet its short-term financial obligations, which is a red flag for lenders.
Lenders view negative working capital as a sign of potential cash flow problems. You must understand why it exists and have a clear plan to improve it post-acquisition, often requiring a larger working capital injection or a seller note on full standby. It's a critical item to address during due diligence.
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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