Glossary · Reading the business
Net income(Profit, Bottom line)
In short
Net income, or profit, is what's left after all expenses, including taxes, are deducted from revenue. It's the bottom line on the Profit and Loss Statement and shows the business's actual profitability.
What it means in a deal
While net income is important, for an acquisition, lenders often focus more on SDE or EBITDA, which "add back" certain expenses to show the cash flow available to a new owner. High net income is good, but understand how it translates to cash available for debt service after adjustments. Don't confuse net income with cash flow.
Related terms
Common questions about Net income
- What is the specific personal net worth threshold that triggers a personal guaranty requirement for an owner?
- Can I use an SBA 7(a) loan to purchase a business with a negative net worth?
- Can an SBA 7(a) loan be used to purchase a business with a negative net worth?
- What if the acquired business primarily generates revenue from passive rental income?
- What constitutes "passive income" disqualifying a business from 7(a) loan eligibility?
- Can an SBA 7(a) loan be used to purchase a business with a negative tangible net worth?
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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