Glossary · Reading the business
Owner Distribution
In short
This is money paid out from the business's profits to its owners, distinct from salary or wages. It reduces the cash available to the business.
What it means in a deal
When analyzing a target business, scrutinize historical owner distributions. High or inconsistent distributions can indicate the seller extracted cash that otherwise would have stayed in the business, potentially inflating its apparent SDE or reducing available working capital. Factor these into your cash flow projections.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Owner Distribution
- Can life insurance be used to ensure fair distribution of assets among non-active heirs in a family business?
- Is it necessary to obtain separate life insurance policies for each owner in a multi-owner business?
- Are non-owner spouses always required to personally guarantee SBA loans?
- How does the SBA guarantee primarily benefit me as the business owner?
- Are there any specific training or experience requirements for the business owner?
- What does a 'personal guaranty' mean for me as a business owner?
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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