Glossary · Reading the business
Administrative expense(SG&A)
In short
Costs incurred by a business that are not directly related to producing goods or services, such as office rent, salaries for support staff, and legal fees. These are overhead costs.
What it means in a deal
When reviewing financial statements, analyze administrative expenses to see if they are reasonable and necessary for the business's operations. Identify any discretionary or owner-specific expenses that can be "added back" to increase owner earnings.
Related terms
Common questions about Administrative expense
- How does business overhead expense insurance differ from key-person life insurance?
- How do shared administrative services, like HR or accounting, automatically trigger affiliation for size determination?
- Does sharing common administrative services, like HR or accounting, automatically trigger affiliation for size determination?
- What specific components are included in the lender's administrative fee for an SBA 7(a) loan?
- What kind of everyday expenses can working capital cover?
- Which pre-closing business expenses can count towards equity?
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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