Glossary · Reading the business
Business debt
In short
This is any money the target business owes to lenders, vendors, or others. When acquiring a business, you need to understand what debt you'll inherit or what needs to be paid off at closing.
What it means in a deal
As a buyer, you must identify all existing business debt during due diligence. In an asset purchase, most operational debt remains with the seller, but you need to ensure all liens are released. In a stock purchase, you typically assume all existing liabilities, including debt. Your lender will require all seller debt to be paid off or refinanced at closing, unless it's explicitly part of the deal structure.
Related terms
Common questions about Business debt
- Can I use an SBA 7(a) loan for debt consolidation of existing business debts?
- Can I use an SBA 7(a) loan to refinance existing business debt?
- Can an SBA 7(a) loan be used to refinance existing business debt?
- Can a new business owner use an SBA 7(a) loan to refinance existing business debt?
- What if the seller holds a significant portion of the acquired business's debt?
- Can an SBA 7(a) loan be used to refinance high-interest business debt?
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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