Glossary · Reading the business
SDE(seller's discretionary earnings)
In short
EBITDA plus the owner's salary and perks. For small businesses, this is the truest picture of what the business pays its owner.
What it means in a deal
SDE is the metric most commonly used for small businesses (typically under $2M in earnings) because the owner is usually also the operator. By adding back the owner's salary on top of EBITDA, you get a view of the total economic benefit to whoever is running the company. Lenders look at SDE when sizing the DSCR for small deals, because it tells them whether the business generates enough to both service the debt and pay you a living wage.
Related terms
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 2026-06-16 · 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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