Glossary · Reading the business
Interest Cost
In short
The total amount of money paid by the borrower for the use of borrowed funds over the life of a loan. Buyer cares because it's a significant expense that impacts the business's profitability and cash flow.
What it means in a deal
For an acquisition, you'll project the Interest Cost of your SBA 7(a) loan as a major operating expense. A variable rate loan means your Interest Cost can fluctuate, impacting your Cash Flow After Debt Service. Model different interest rate scenarios during due diligence to understand potential impacts.
Related terms
Common questions about Interest Cost
- Can closing costs such as legal and accounting fees be included in the total project cost for the 10% calculation?
- What factors primarily influence the premium cost of business life insurance?
- Can an SBA 7(a) loan cover the cost of inventory for a business?
- Can an SBA 7(a) loan cover the cost of a business valuation or appraisal?
- What percentage of the project cost does the SBA typically expect as a down payment?
- What additional costs or fees, other than interest, are typically involved with an SBA 7(a) 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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