Glossary · Reading the business
Owner draw
In short
Funds taken out of a business by its owner, typically from a sole proprietorship or partnership, for personal use. It's a key component of seller's discretionary earnings (SDE) and understanding the true owner benefit.
What it means in a deal
When analyzing a business's financials, you'll see owner draws on the Profit and Loss Statement. These are usually "added back" to calculate SDE, giving you a clearer picture of the actual cash flow available to a new owner. This figure is crucial for determining your ability to service debt.
Related terms
Common questions about Owner draw
- 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?
- How is prior owner debt converted to equity treated for injection purposes?
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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