Glossary · Reading the business
Capacity to Repay
In short
This is the business's ability to generate enough cash flow to cover all its debt payments, including your new SBA loan. Lenders scrutinize this to ensure the business won't default.
What it means in a deal
Your lender will analyze historical financial statements and projections to confirm the business can comfortably service the loan. Focus on the Debt Service Coverage Ratio (DSCR), which shows how many times the business can cover its debt. A strong DSCR is crucial for loan approval.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Capacity to Repay
- How does an SBA 7(a) loan typically handle seasonal businesses for repayment capacity?
- How long do I have to repay an SBA 7(a) loan?
- How long can I take to repay an SBA 7(a) loan?
- How long do I typically have to repay an SBA 7(a) loan?
- Are SBA 7(a) loans grants that I don't have to repay?
- How many years do I typically have to repay an SBA 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.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
Free · No documents · Usually same-day
Backed by data on 1,000+ SBA lenders and 300,000+ funded deals. Your details go only to lending partners you ask to be matched with — never sold to advertisers.