Glossary · Reading the business
Regulatory capital ratio
In short
This is a measure of a financial institution's capital relative to its risk-weighted assets, used by regulators to ensure banks have enough capital to absorb potential losses. This typically applies to the lender, not your target business.
What it means in a deal
While not directly about your target business, your lender's regulatory capital ratio can indirectly affect loan availability and terms. Banks must maintain certain ratios to lend. Understanding this helps you appreciate the lender's risk assessment and their requirements for your loan.
Related terms
Common questions about Regulatory capital ratio
- Does the SBA require a specific debt service coverage ratio (DSCR) for approval?
- What is the debt-to-worth ratio requirement for a $0-down partner buyout?
- When is a debt service coverage ratio waiver or exception possible for an acquisition?
- How does a seller note on full standby affect the debt service coverage ratio calculation?
- What if my personal debt-to-income ratio is high, even with a good credit score?
- What level of debt service coverage ratio (DSCR) does an SBA 7(a) lender typically look for?
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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