Glossary · Reading the business
Burn Rate
In short
This is the rate at which a business is spending its available cash, typically when it's operating at a loss. It tells you how long the business can survive before running out of money.
What it means in a deal
For an acquisition, analyzing the target business's burn rate is critical, especially if it's not yet profitable or has high startup costs. A high burn rate indicates financial risk and requires a clear plan for achieving profitability quickly. Ensure your cash flow projections account for this.
Related terms
Common questions about Burn Rate
- What alternative base rates are available for variable-rate 7(a) loans besides the Wall Street Journal Prime rate?
- What is the 'Prime Rate' when talking about SBA 7(a) loan rates?
- What specific alternative base rates are permissible for variable rate 7(a) loans?
- What is the Wall Street Journal Prime Rate's role in SBA 7(a) loan interest rates?
- What are the maximum allowable interest rates for variable rate 7(a) loans, including the permissible spread?
- What are the current alternative base rate options for variable rate 7(a) loans, besides Prime Rate?
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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