{"ok":true,"canonical_url":"https://dealroom.so/glossary/due-diligence","api_url":"https://dealroom.so/api/public/glossary/due-diligence","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":"due-diligence","term":"Due diligence","group":"Doing the deal","definition":"Your inspection period: verifying financials, contracts, customers, and everything the seller claimed.","what_it_means":"Due diligence is your opportunity to verify every claim in the CIM before you're committed to buy. Pull the IRS transcripts, match them to the P&Ls, interview key employees (with the seller's permission), review all contracts, check for pending litigation, and inspect physical assets. Most LOIs give you thirty to sixty days of exclusivity to complete this. Skipping or rushing due diligence is the most common mistake first-time buyers make — deals that look good in the listing can unravel fast when you look under the hood.","url":"https://dealroom.so/glossary/due-diligence","official_sources":[],"related":[{"slug":"irs-transcripts","term":"IRS transcripts (4506-T)","url":"https://dealroom.so/glossary/irs-transcripts"},{"slug":"loi","term":"LOI","url":"https://dealroom.so/glossary/loi"},{"slug":"cim-deal-book","term":"CIM","url":"https://dealroom.so/glossary/cim-deal-book"},{"slug":"escrow-holdback","term":"Escrow / holdback","url":"https://dealroom.so/glossary/escrow-holdback"}],"related_questions":[{"question":"How does declining revenue during due diligence impact loan approval?","url":"https://dealroom.so/sba-7a/questions/how-does-declining-revenue-during-due-diligence-impact-loan-approval"},{"question":"What environmental due diligence is mandatory for real estate collateral?","url":"https://dealroom.so/sba-7a/questions/what-environmental-due-diligence-is-mandatory-for-real-estate-collateral"},{"question":"What if the acquired business has environmental contamination issues discovered during due diligence?","url":"https://dealroom.so/sba-7a/questions/what-if-the-acquired-business-has-environmental-contamination-issues-discovered-during-due"},{"question":"What if the seller is unwilling to provide sufficient financial documentation during due diligence?","url":"https://dealroom.so/sba-7a/questions/what-if-the-seller-is-unwilling-to-provide-sufficient-financial-documentation-during-due-d"},{"question":"If key employees resign during due diligence, could this kill the SBA loan approval?","url":"https://dealroom.so/sba-7a/questions/if-key-employees-resign-during-due-diligence-could-this-kill-the-sba-loan-approval"},{"question":"What due diligence is required for a franchise not on the SBA Franchise Directory?","url":"https://dealroom.so/sba-7a/questions/what-due-diligence-is-required-for-a-franchise-not-on-the-sba-franchise-directory"}]},"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 — Due diligence","url":"https://dealroom.so/glossary/due-diligence","source_type":"DealRoom Data"}}