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Glossary

What is Sources and Uses?

Also called: S&U, sources & uses, deal structure

In one sentence: A table of what a project costs in total (uses) and where each dollar comes from (sources), which must match.

Last updated · Precise SBA editorial

In plain English

A sources and uses table answers two questions on one page: what does this cost in total, and where does the money come from? The two sides must be equal.

How to build it

Uses: everything you will spend at closing.

  • Purchase price
  • Closing, legal and other costs
  • Financing fees
  • Working capital funded at closing

Sources: everything paying for it.

  • The loan (usually the plug: total uses minus the other sources)
  • Your cash, which is your equity injection
  • Seller financing, standby or paying
  • Any other contribution

Hypothetical example

Uses$Sources$
Purchase price1,000,000Bank loan1,035,000
Closing and fees50,000Buyer cash57,500
Working capital100,000Seller note (standby)57,500
Total1,150,000Total1,150,000

Why it comes first

Everything else flows from it: the loan size drives the payment, the payment drives coverage, and your cash requirement is visible at a glance. Many deals stall because someone discovers late that costs were left out.

Common mistakes

  • Leaving out closing costs and fees, which surprise buyers at the table.
  • Forgetting working capital. The business needs cash on day one.
  • Counting a contribution that does not exist yet, such as a hoped-for seller concession.
  • Mixing up price and project cost. Lenders size against the project.

What to do with it

Build yours in the acquisition calculator, or see a finished one in the sample package.

Common questions

Why must sources equal uses?

Because every dollar spent has to come from somewhere. If they do not match, something is missing, such as unlisted closing costs or an assumed contribution that does not exist yet.

What belongs in uses?

The purchase price, closing and legal costs, financing fees, and any working capital you plan to fund at closing. Leaving costs out is the most common error.

Do lenders want to see one?

Yes. It is the first thing they use to understand a deal. A clear table also shows you what you must bring in cash.

Related terms

Equity InjectionThe portion of a project paid with the buyer’s own money, in addition to the loan, which lenders require and expect to be documented.Standby Seller NoteSeller financing in which the seller agrees not to be paid for a set period and ranks behind the bank loan, so it does not draw on the buyer’s cash flow.Debt Service Coverage Ratio (DSCR)Cash available to pay debts, divided by the debt payments due in the same period; above 1.0x there is a cushion, and lenders want margin above their own minimum.

Go deeper

Buying a Business with an SBA Loan: How the Financing Comes TogetherAn acquisition loan is underwritten on the business you're buying, and on you. Here's how the pieces fit, in the order they usually come up.Equity Injection and Seller Notes in an SBA Business PurchaseTwo ideas drive the cash side of most acquisitions: how much of your own money goes in, and how the seller's financing is treated. The details changed with SOP 50 10 8.1, so confirm them before you negotiate.

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General information, not legal, tax or financial advice. Precise SBA is not affiliated with the U.S. Small Business Administration. Rules and lender policies change. Examples use hypothetical numbers. We never charge you. If a loan closes, the lender may pay us a referral fee, disclosed on SBA Form 159 (how we get paid). Back to the glossary.