{"ok":true,"canonical_url":"https://dealroom.so/glossary/material-non-compliance","api_url":"https://dealroom.so/api/public/glossary/material-non-compliance","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":"material-non-compliance","term":"Material non-compliance","group":"Reading the business","definition":"This means the business isn't following significant laws or regulations. It's a major red flag because it could lead to fines, legal issues, or even business closure, impacting your investment.","what_it_means":"During due diligence, your job is to uncover any material non-compliance issues. Look at environmental permits, labor laws, licensing, and industry-specific regulations. These can kill a deal or become your problem post-acquisition if not addressed.","url":"https://dealroom.so/glossary/material-non-compliance","official_sources":[],"related":[{"slug":"due-diligence","term":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"omission-of-material-facts","term":"Omission of material facts","url":"https://dealroom.so/glossary/omission-of-material-facts"},{"slug":"intentional-misrepresentation","term":"Intentional misrepresentation","url":"https://dealroom.so/glossary/intentional-misrepresentation"}],"related_questions":[{"question":"What constitutes 'material non-compliance' with SBA lending policies that typically leads to a guaranty repair or denial?","url":"https://dealroom.so/for-lenders/questions/what-constitutes-material-non-compliance-with-sba-lending-policies-that-typically-leads-to"},{"question":"What constitutes 'material non-compliance' by a lender during underwriting or closing that could result in a repair to the 7(a) guaranty?","url":"https://dealroom.so/for-lenders/questions/what-constitutes-material-non-compliance-by-a-lender-during-underwriting-or-closing-that-c"},{"question":"What specific underwriting failures or omissions by a lender are categorized as 'material non-compliance' by the SBA, risking 7(a) guaranty repair or denial?","url":"https://dealroom.so/for-lenders/questions/what-specific-underwriting-failures-or-omissions-by-a-lender-are-categorized-as-material-n"},{"question":"How does SBA Form 1919 ensure borrower eligibility compliance for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/how-does-sba-form-1919-ensure-borrower-eligibility-compliance-for-a-7-a-loan"},{"question":"Does an SBA 7(a) loan require specific reporting or compliance after I receive the funds?","url":"https://dealroom.so/sba-loans/basics/does-an-sba-7-a-loan-require-specific-reporting-or-compliance-after-i-receive-the-funds"},{"question":"What if the business I'm buying has a history of environmental violations or ongoing compliance issues?","url":"https://dealroom.so/sba-7a/questions/what-if-the-business-i-m-buying-has-a-history-of-environmental-violations-or-ongoing-compl"}]},"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 — Material non-compliance","url":"https://dealroom.so/glossary/material-non-compliance","source_type":"DealRoom Data"}}