Glossary · Reading the business
Income Statements
In short
These financial reports show a business's revenue, costs, and profit or loss over a specific period. They are critical for understanding historical performance and profitability.
What it means in a deal
You'll review income statements for at least the past three years during due diligence to verify revenue trends and identify major expenses. Pay close attention to owner's salary and discretionary expenses, as these are often 'add-backs' when calculating normalized cash flow.
Related terms
Common questions about Income 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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