Glossary · Reading the business
P&L(Profit and Loss Statement)
In short
A financial statement summarizing a business's revenues, costs, and expenses over a period, showing its net profit or loss. Buyers care because it's the primary document to assess a business's historical profitability.
What it means in a deal
The P&L, also known as an Income Statement, is fundamental to your due diligence. You'll analyze several years of P&Ls to understand revenue trends, cost structure, and ultimately, the business's cash flow available for debt service and owner compensation. Identify any one-time or owner-related expenses for add-backs.
Related terms
Common questions about P&L
- Can a tenant improvement allowance from a new landlord count towards my equity injection for a leasehold acquisition?
- Can an SBA 7(a) loan cover buying land for my business to build on later?
- What if the business I'm buying has existing legal disputes or pending lawsuits?
- Why do lenders typically prefer larger amounts for SBA 7(a) loans?
- What level of environmental due diligence is required for leasehold improvements only, without real estate acquisition?
- What are the specific eligibility requirements for a franchise agreement that lacks a formal review or listing on the SBA Franchise Directory?
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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