Glossary · Reading the business
Cash flow
In short
Cash flow represents the actual movement of cash into and out of a business. It's crucial because it shows if the business can generate enough money to cover its expenses, including loan payments.
What it means in a deal
When buying a business with an SBA 7(a) loan, you must understand the target's historical and projected cash flow. Lenders heavily rely on this to assess repayment capacity and ensure the business can service the new debt. Look at SDE or EBITDA for a clearer picture of owner earnings.
Related terms
Common questions about Cash flow
- Can future cash flow or profits from the acquired business count as equity injection?
- How can an SBA 7(a) loan help with ongoing cash flow for my business?
- What is the primary factor a lender considers when evaluating the cash flow from an acquired business?
- Are there any restrictions on the use of cash flow projections for an SBA 7(a) acquisition loan?
- Can I use an SBA 7(a) loan for my business's daily operating expenses or cash flow?
- How does a lender evaluate the reasonableness of a borrower's projections for future revenue and cash flow?
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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