Glossary · Doing the deal
Escrow account
In short
This is a temporary account held by a neutral third party to hold funds or documents until specific conditions of a transaction are met. As a buyer, it protects your interests during the closing process.
What it means in a deal
In an acquisition, an escrow account is often used to hold a portion of the purchase price, known as a holdback or earnout, for a period post-closing. This protects you against undisclosed liabilities or ensures the seller meets certain post-closing obligations. Make sure the escrow agreement is clear on release conditions.
Related terms
Common questions about Escrow account
- Can funds from a personal investment account, like a brokerage account, count towards equity injection?
- Can funds from a personal investment account with fluctuating value, like a brokerage account, count towards equity?
- Can I use funds from a personal investment account, like a brokerage account, for my equity injection?
- Can funds from a personal investment account, like a brokerage account, count towards the SBA 7(a) loan equity injection?
- How does a lender verify equity injection funds from a personal investment account with fluctuating values, like a brokerage account?
- Can cash in the business bank account count as collateral?
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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