Glossary · Reading the business
Add-backs
In short
Personal or one-time expenses added back to profit to show true earnings (owner's car, one-time lawsuit). Lenders only accept documented ones.
What it means in a deal
Add-backs are legitimate when they're truly personal (the owner's cell phone, a family member's salary who won't stay) or genuinely one-time (a roof replacement, a one-time legal settlement). The problem: sellers sometimes inflate add-backs to make the business look more profitable. Lenders scrutinize every add-back carefully, and they'll disallow any that aren't clearly documented and non-recurring. Your attorney should review the add-back schedule before you finalize the LOI.
Related terms
Common questions about Add-backs
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-16 · 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.
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