Glossary · Reading the business
Third-party debt
In short
This refers to any debt owed by the business to an entity other than the business's owners or related parties, such as bank loans, vendor credit, or equipment financing.
What it means in a deal
When buying a business, you need a clear picture of all existing third-party debt. This debt will either need to be paid off at closing or assumed by you. Understand the terms, interest rates, and collateral for all existing debt as it impacts the business's total liabilities and your new loan structure.
Related terms
Common questions about Third-party debt
- How does a lender verify the full standby status of a non-SBA third-party debt?
- Can a third-party loan, not from the seller, count towards the minimum equity injection?
- What specific language must a non-SBA third-party standby agreement include to ensure eligibility?
- Can an SBA 7(a) loan finance the purchase of intellectual property rights from a third party?
- What are the eligibility requirements for funds borrowed from a third party to count as equity injection?
- Can I use an SBA 7(a) loan to purchase a business from an unrelated third party?
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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