Glossary · Reading the business
Financial ratios
In short
Calculations using a business's financial statements to assess its performance, health, and risk. Lenders use these to understand the business's ability to repay the loan.
What it means in a deal
Your lender will analyze ratios like Debt Service Coverage Ratio (DSCR), current ratio, and debt-to-equity. These tell a story about profitability, liquidity, and leverage. Understand these for the target business; strong ratios are key to loan approval and demonstrating repayment capacity.
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 ratios
- 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.
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