{"ok":true,"canonical_url":"https://dealroom.so/glossary/distressed-business","api_url":"https://dealroom.so/api/public/glossary/distressed-business","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":"distressed-business","term":"Distressed business","group":"Reading the business","definition":"A business facing significant financial or operational challenges, often with declining revenue, high debt, or poor cash flow. Buying one means higher risk but potentially a lower purchase price.","what_it_means":"The SBA 7(a) loan program is generally not for distressed businesses, as lenders look for strong repayment capacity. If the business is struggling, you'll need a very compelling business plan and financial projections showing a clear path to profitability and debt service. Expect extra scrutiny.","url":"https://dealroom.so/glossary/distressed-business","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"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"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-projections","term":"Financial projections","url":"https://dealroom.so/glossary/financial-projections"},{"slug":"business-plan","term":"Business plan","url":"https://dealroom.so/glossary/business-plan"}],"related_questions":[{"question":"Does the Small Business Administration (SBA) ever directly lend money to small businesses?","url":"https://dealroom.so/sba-loans/basics/does-the-small-business-administration-sba-ever-directly-lend-money-to-small-businesses"},{"question":"What is the importance of a detailed business plan for an SBA 7(a) loan application, especially for new or acquiring businesses?","url":"https://dealroom.so/for-lenders/questions/what-is-the-importance-of-a-detailed-business-plan-for-an-sba-7-a-loan-application-especia"},{"question":"Are SBA 7(a) loans only for struggling businesses?","url":"https://dealroom.so/sba-loans/basics/are-sba-7-a-loans-only-for-struggling-businesses"},{"question":"Is the SBA 7(a) program widely used by small businesses?","url":"https://dealroom.so/sba-loans/basics/is-the-sba-7-a-program-widely-used-by-small-businesses"},{"question":"Are SBA 7(a) loans primarily for very large, established businesses?","url":"https://dealroom.so/sba-loans/basics/are-sba-7-a-loans-primarily-for-very-large-established-businesses"},{"question":"Are SBA 7(a) loans exclusively for businesses with financial difficulties?","url":"https://dealroom.so/sba-loans/basics/are-sba-7-a-loans-exclusively-for-businesses-with-financial-difficulties"}]},"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 — Distressed business","url":"https://dealroom.so/glossary/distressed-business","source_type":"DealRoom Data"}}