Glossary · Reading the business
Business expense
In short
These are costs incurred by a business to generate revenue, ranging from salaries and rent to supplies and marketing. Understanding these is crucial for assessing profitability.
What it means in a deal
During due diligence, scrutinize all business expenses on the Profit and Loss Statement. Look for "add-backs" that are truly discretionary or non-recurring to accurately calculate the business's true owner earnings and cash flow.
Related terms
Common questions about Business expense
- How does business overhead expense insurance differ from key-person life insurance?
- Which pre-closing business expenses can count towards equity?
- Can working capital be used for unexpected business expenses after closing?
- For what specific types of business expenses can I use an SBA 7(a) loan?
- Can an SBA 7(a) loan be used for general business expenses like ongoing rent?
- Can I use an SBA 7(a) loan to cover my business's daily operating expenses?
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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