Glossary · Reading the business
Personal Expense
In short
Business funds used by the owner for personal benefit, often hidden within company financials. Identifying and "adding back" these expenses is key to seeing the true profitability available to a new owner.
What it means in a deal
Sellers often run personal expenses through their business to reduce taxable income. You must meticulously review bank statements and general ledgers to identify these. Properly adding them back increases the adjusted net income, which directly impacts the valuation and your ability to qualify for an SBA loan.
Related terms
Common questions about Personal Expense
- How does business overhead expense insurance differ from key-person life insurance?
- Can I use SBA 7(a) loan funds for personal expenses?
- Am I allowed to use SBA 7(a) loan funds to pay my personal expenses?
- Can I use the $50,000 working capital portion of my SBA loan to cover my personal living expenses for six months?
- Does a personal guaranty extend to my personal assets acquired after the loan closing date?
- What happens if a required personal guarantor lacks sufficient personal assets for an effective guaranty?
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.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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