Glossary · Reading the business
Earnings
In short
Earnings represent the profit a business generates, which is fundamental to its valuation and its ability to repay debt. As a buyer, you care because this is the core metric for assessing the business's financial health and future prospects.
What it means in a deal
Lenders and buyers focus on key earnings metrics like Seller's Discretionary Earnings (SDE) or Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) to evaluate the business's true cash flow and repayment capacity. These figures are often adjusted with add-backs to reflect the operational reality for a new owner.
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 Earnings
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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