Glossary · Reading the business
Financial leverage
In short
This is the extent to which a business uses borrowed money (debt) to finance its assets and operations. It can amplify returns but also increases risk if the business can't service the debt.
What it means in a deal
In an SBA 7(a) acquisition, you're inherently using financial leverage by taking on debt to buy the business. The goal is for the business's returns on the purchased assets to exceed the cost of the debt. Lenders will scrutinize your proposed leverage through metrics like the Debt-to-equity ratio and DSCR to ensure it's sustainable.
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 Financial leverage
- What if my personal financial statement shows low liquid assets?
- Are SBA 7(a) loans exclusively for businesses with financial difficulties?
- What if my business is new and has no financial history?
- Does misrepresenting financial information on the SBA application automatically kill approval?
- How does my personal financial history affect SBA 7(a) loan approval?
- What specific financial documentation will I need to provide for my personal finances?
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.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
Free · No documents · Usually same-day
Backed by data on 1,000+ SBA lenders and 300,000+ funded deals. Your details go only to lending partners you ask to be matched with — never sold to advertisers.