Glossary · Reading the business
Research and development
In short
This refers to activities a business undertakes to innovate, develop new products or services, or improve existing ones. It's often an expense line item that can impact current profitability but drive future growth.
What it means in a deal
When reviewing a target business, understand if significant R&D expenses are necessary for its ongoing competitiveness or if they represent discretionary spending. High R&D can depress current profits, but cutting it might harm future growth. Analyze its historical impact on the business's valuation and projections.
Related terms
Common questions about Research and development
- What if the business I'm buying requires significant ongoing research and development?
- Can I use a conditional grant from a local economic development agency as equity?
- What is the role of an SBA Business Development Officer (BDO) in my loan process?
- What is the relationship between SBA Form 1919 and 1920, and which is currently required for 7(a) loan applications?
- What is the ongoing annual service fee for a 7(a) loan, and how is it calculated and remitted by the lender?
- Which critical loan terms and borrower data must match precisely between the lender's system and E-Tran for 7(a) submissions?
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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