Glossary · Reading the business
Historical Cash Flow
In short
The actual cash generated by a business over past periods, typically seen in tax returns and financial statements. This is a key indicator of a business's ability to cover its debt service.
What it means in a deal
Lenders heavily scrutinize historical cash flow to determine if the business can support the new debt. They'll look at tax returns and Profit and Loss Statements for the last 3 years, making "add-backs" to calculate SDE or EBITDA. Your job is to understand these numbers and their implications for future repayment capacity.
Related terms
Common questions about Historical Cash Flow
- Can I get an SBA 7(a) loan if the business I'm buying has poor historical cash flow?
- What if the business I'm acquiring has poor historical cash flow or declining revenues for the last two years?
- Can future cash flow or profits from the acquired business count as equity injection?
- How can an SBA 7(a) loan help with ongoing cash flow for my business?
- What is the primary factor a lender considers when evaluating the cash flow from an acquired business?
- Are there any restrictions on the use of cash flow projections for an SBA 7(a) acquisition loan?
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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