Glossary · Reading the business
Financial statements
In short
These are the core documents (P&L, Balance Sheet, Cash Flow Statement) that show a business's past financial performance. You need them to understand profitability and health.
What it means in a deal
Lenders require several years of financial statements to assess the business's ability to repay the loan. You'll use them during due diligence to verify revenue, expenses, and assets, often adjusting for owner compensation (add-backs) to calculate SDE or EBITDA.
Related terms
Common questions about Financial statements
- Do I need to provide personal financial statements for an SBA 7(a) loan?
- What types of personal financial statements are required for an SBA 7(a) loan?
- What types of personal financial statements are typically required for an SBA 7(a) loan application?
- Can unverified or inconsistent financial statements from the seller cause my SBA loan to be denied?
- What kind of financial statements does the SBA 7(a) loan application require from my business?
- What specific due diligence does the lender perform on the target business's financial statements for an acquisition?
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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