Glossary · Reading the business
Trade Payable
In short
A trade payable is money owed by the business to its suppliers for goods or services purchased on credit. These are short-term liabilities on the balance sheet.
What it means in a deal
When reviewing a business's balance sheet, trade payables indicate how much the business owes its vendors. A high or rapidly increasing amount might suggest cash flow problems or aggressive credit terms. Understand the payment terms with key suppliers, as these directly impact the business's working capital needs. You'll inherit these obligations, so factor them into your post-acquisition cash flow projections.
Related terms
Common questions about Trade Payable
- Can an SBA 7(a) working capital loan be used to pay off seller's outstanding trade payables?
- Can I use the working capital portion of my SBA loan to pay off the acquired business's existing trade payables?
- How does a lender calculate the ongoing annual service fee payable to the SBA for a 7(a) loan?
- Can a 7(a) loan finance the purchase of intangible assets like customer lists or trade secrets in a business acquisition?
- Can an SBA 7(a) working capital loan be used to pay off existing accounts payable of the acquired business at closing?
- Can the working capital portion of my SBA 7(a) loan be used to pay existing accounts payable of the acquired business?
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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