Glossary · Reading the business
In short
Repayment capacity is the ability of a business to generate enough cash flow to cover its debt payments. Lenders care because it directly shows if your acquired business can realistically pay back the SBA loan.
Lenders scrutinize the target business's historical financials and your projections, specifically focusing on cash flow after operating expenses but before debt service. You need strong SDE or EBITDA relative to the proposed loan payments to demonstrate this. If your deal's repayment capacity is weak, it won't get funded.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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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