Glossary · Reading the business
Net profit
In short
This is what's left of a business's revenue after all expenses, including taxes, are paid. It's a key indicator of a business's true profitability and financial health for a buyer.
What it means in a deal
When evaluating a business, net profit is a core metric. However, for an SBA loan, lenders often focus on SDE or EBITDA, which adjust for owner compensation and non-cash expenses, providing a clearer picture of the business's cash flow available for debt service. Always look beyond stated net profit.
Related terms
Common questions about Net profit
- Can a non-profit organization with a for-profit subsidiary be eligible for a 7(a) loan?
- Can a non-profit organization receive an SBA 7(a) loan?
- 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?
- Does my business need to be a for-profit company to qualify?
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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