{"ok":true,"canonical_url":"https://dealroom.so/glossary/material-risk","api_url":"https://dealroom.so/api/public/glossary/material-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":"material-risk","term":"Material Risk","group":"Reading the business","definition":"This is any risk significant enough to influence a reasonable person's decision about buying or lending to a business. It's a critical factor in due diligence.","what_it_means":"During due diligence, you must uncover and assess all material risks, whether financial, operational, or legal. Lenders will also identify these, as they impact the business's repayment capacity and loan eligibility. Don't hide or downplay risks; address them head-on.","url":"https://dealroom.so/glossary/material-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":"due-diligence","term":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"repayment-capacity","term":"Repayment capacity","url":"https://dealroom.so/glossary/repayment-capacity"},{"slug":"collateral-risk","term":"Collateral Risk","url":"https://dealroom.so/glossary/collateral-risk"},{"slug":"omission-of-material-facts","term":"Omission of material facts","url":"https://dealroom.so/glossary/omission-of-material-facts"}],"related_questions":[{"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":"What are the consequences if SBA Form 1919 contains material omissions or misrepresentations?","url":"https://dealroom.so/for-lenders/questions/what-are-the-consequences-if-sba-form-1919-contains-material-omissions-or-misrepresentatio"},{"question":"Can a lender approve a material change to collateral without prior SBA approval?","url":"https://dealroom.so/for-lenders/questions/can-a-lender-approve-a-material-change-to-collateral-without-prior-sba-approval"},{"question":"What constitutes a 'material adverse change' that could affect my loan approval after application?","url":"https://dealroom.so/sba-7a/questions/what-constitutes-a-material-adverse-change-that-could-affect-my-loan-approval-after-applic"},{"question":"Which material servicing actions can a 7(a) lender take without prior SBA approval?","url":"https://dealroom.so/for-lenders/questions/which-material-servicing-actions-can-a-7-a-lender-take-without-prior-sba-approval"},{"question":"How does an unapproved material servicing action impact the SBA's 7(a) loan guaranty?","url":"https://dealroom.so/for-lenders/questions/how-does-an-unapproved-material-servicing-action-impact-the-sba-s-7-a-loan-guaranty"}]},"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 Risk","url":"https://dealroom.so/glossary/material-risk","source_type":"DealRoom Data"}}