Glossary · Reading the business
Expense
In short
The costs incurred in running a business to generate revenue, such as rent, utilities, and salaries. Buyers care because expenses directly reduce profit and impact the business's overall financial health.
What it means in a deal
Scrutinize every line item on the P&L to understand the business's expense structure. Differentiate between fixed and variable expenses. Look for discretionary expenses or owner-related costs that can be added back to calculate SDE. High or unusual expenses warrant further investigation during due diligence.
Related terms
Common questions about Expense
- How does business overhead expense insurance differ from key-person life insurance?
- What kind of everyday expenses can working capital cover?
- Which pre-closing business expenses can count towards equity?
- Can working capital be used for unexpected business expenses after closing?
- Can I use SBA 7(a) loan funds for personal expenses?
- What types of expenses can an SBA 7(a) loan cover?
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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