Glossary · Reading the business
Capital adequacy
In short
How much capital (cash, assets) a business has relative to its risks and operations. A strong capital position means less risk for you and your lender.
What it means in a deal
Lenders evaluate a business's capital adequacy to ensure it can cover its liabilities and operate without immediate financial distress. As a buyer, review the balance sheet to understand current capital, and factor in your post-acquisition working capital needs.
Related terms
Common questions about Capital adequacy
- Are there specific limits on the amount of working capital that can be included in a 7(a) Working Capital Pilot Program loan?
- What kind of everyday expenses can working capital cover?
- Can an SBA 7(a) loan finance working capital?
- What is the typical repayment term for working capital only?
- Can working capital be used for unexpected business expenses after closing?
- What does 'working capital' mean for 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.
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