Glossary · People and paperwork
Escrow / holdback(holdback)
In short
Money parked with a neutral third party after closing to cover surprises, like unpaid taxes or broken promises in the contract.
What it means in a deal
An escrow holdback keeps a portion of the seller's proceeds locked up for a defined period after closing — typically six to eighteen months — as security for representations and warranties in the purchase agreement. If a problem surfaces (a hidden tax liability, an undisclosed lawsuit, a key customer who leaves because of the sale), you can make a claim against the holdback instead of suing the seller personally. On SBA deals the escrow structure must be disclosed to the lender.
Related terms
Common questions about Escrow / holdback
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 2026-06-16 · 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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