{"ok":true,"canonical_url":"https://dealroom.so/glossary/default-risk","api_url":"https://dealroom.so/api/public/glossary/default-risk","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"default-risk","term":"Default Risk","group":"Reading the business","definition":"This is the chance the business won't generate enough cash to pay its debts, including your SBA loan. As a buyer, you need to assess this carefully because you're personally guaranteeing the loan.","what_it_means":"Lenders evaluate default risk by looking at historical financial performance and projecting future cash flow. Your job is to understand the drivers of that risk, like customer concentration or market volatility, and build a strong business plan to mitigate it.","url":"https://dealroom.so/glossary/default-risk","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"cash-flow","term":"Cash flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"repayment-capacity","term":"Repayment capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"financial-performance","term":"Financial Performance","url":"https://dealroom.so/glossary/financial-performance"},{"slug":"personal-guarantee","term":"Personal guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}],"related_questions":[{"question":"What happens if I default on an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/what-happens-if-i-default-on-an-sba-7-a-loan"},{"question":"How does a lender request an SBA guaranty purchase after loan default?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-request-an-sba-guaranty-purchase-after-loan-default"},{"question":"What constitutes 'prudent liquidation' for a 7(a) loan to protect the SBA guaranty during default?","url":"https://dealroom.so/for-lenders/questions/what-constitutes-prudent-liquidation-for-a-7-a-loan-to-protect-the-sba-guaranty-during-def"},{"question":"What are a lender's primary responsibilities once a 7(a) loan enters liquidation after default?","url":"https://dealroom.so/for-lenders/questions/what-are-a-lender-s-primary-responsibilities-once-a-7-a-loan-enters-liquidation-after-defa"},{"question":"Will a past federal student loan default, now rehabilitated, affect my SBA 7(a) loan approval?","url":"https://dealroom.so/sba-7a/questions/will-a-past-federal-student-loan-default-now-rehabilitated-affect-my-sba-7-a-loan-approval"},{"question":"What are the specific consequences if I default on my personal guaranty for an SBA loan?","url":"https://dealroom.so/sba-7a/questions/what-are-the-specific-consequences-if-i-default-on-my-personal-guaranty-for-an-sba-loan"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Default Risk","url":"https://dealroom.so/glossary/default-risk","source_type":"DealRoom Data"}}