Essential terms for business acquisition, valuation, and commercial financing.
Debt Service Coverage Ratio
A ratio measuring cash flow available to cover debt payments.
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Seller's Discretionary Earnings
Total financial benefit a full-time owner-operator derives from a business.
Earnings Before Interest, Taxes, Depreciation & Amortization
A measure of core business profitability excluding financing and accounting decisions.
Net Operating Income
A property's annual income after operating expenses, before debt service.
Capitalization Rate
The rate of return on a real estate investment based on expected income.
Loan-to-Value Ratio
The ratio of a loan amount to the appraised value of the asset.
Small Business Administration 7(a) Loan Program
The SBA's primary loan program for small business acquisition and growth.
Discounted Cash Flow
A valuation method that estimates value based on projected future cash flows.
Gross Rent Multiplier
A quick valuation metric comparing property price to gross annual rent.
Cash-on-Cash Return
Annual pre-tax cash flow as a percentage of total cash invested.
Buy, Rehab, Rent, Refinance, Repeat
A real estate investment strategy to recycle capital across multiple properties.
Triple Net Lease
A lease where the tenant pays rent plus property taxes, insurance, and maintenance.
Loan Amortization
The process of paying off a loan through scheduled, regular payments over time.
Working Capital
The difference between current assets and current liabilities.