Glossary · Reading the business
Assets, Liabilities, and Net Worth
In short
These are the fundamental components of a balance sheet: assets are what the business owns, liabilities are what it owes, and net worth (or equity) is the difference. They show a company's financial position at a point in time.
What it means in a deal
You'll analyze these on the target business's balance sheets during due diligence to understand its financial health and collateral value. Your personal financial statement will also detail your own assets, liabilities, and net worth, which lenders use to assess your capacity to repay the loan.
Related terms
Common questions about Assets, Liabilities, and Net Worth
- 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?
- Can an SBA 7(a) loan be used to purchase a business with a negative tangible net worth?
- What if my business has a negative net worth? Can I still get an SBA 7(a) loan?
- What is the maximum net worth requirement for a business to qualify as "small" for a 7(a) loan?
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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