Glossary · Reading the business
Debt
In short
Debt is money owed or due to another party, typically repaid with interest over time. It's a major component of a business's liabilities and impacts its financial health.
What it means in a deal
When buying a business, you'll inherit or refinance its existing debt, and you'll incur new debt with your SBA loan. Understand all current debt obligations, their terms, and how they impact the business's cash flow. Lenders scrutinize debt to assess repayment capacity and overall leverage.
Related terms
Common questions about Debt
- Can I use an SBA 7(a) loan for debt consolidation of existing business debts?
- How is prior owner debt converted to equity treated for injection purposes?
- 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 I use an SBA 7(a) loan to pay off personal debt?
- Does the SBA require a specific debt service coverage ratio (DSCR) for approval?
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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