Glossary · Reading the business
Adjusted Net Operating Income
In short
The earnings of a business, adjusted for non-recurring expenses, owner's salary, and other non-operational items. This is the true earnings power for a new owner.
What it means in a deal
Lenders and buyers use Adjusted Net Operating Income (or SDE/EBITDA) to understand the business's true profitability and its ability to cover new debt. You'll add back discretionary owner expenses, one-time costs, and excessive salaries to the reported net income. This is the foundation for calculating DSCR.
Related terms
Common questions about Adjusted Net Operating Income
- How are variable interest rates for SBA 7(a) loans typically determined and adjusted?
- What is the specific personal net worth threshold that triggers a personal guaranty requirement for an owner?
- Can I use an SBA 7(a) loan to purchase a business with a negative net worth?
- Can an SBA 7(a) loan be used to purchase a business with a negative net worth?
- What if the acquired business primarily generates revenue from passive rental income?
- What constitutes "passive income" disqualifying a business from 7(a) loan eligibility?
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 2026-06-15 · 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.
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