{"ok":true,"canonical_url":"https://dealroom.so/glossary/potential-liabilities","api_url":"https://dealroom.so/api/public/glossary/potential-liabilities","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":"potential-liabilities","term":"Potential Liabilities","group":"Reading the business","definition":"These are possible future financial obligations or risks that the business might incur. Identifying them during due diligence helps you assess the true cost of the business and negotiate protections against future surprises.","what_it_means":"Look for potential liabilities like outstanding warranty claims, environmental issues, undisclosed debts, or pending legal actions. Your due diligence should include reviewing contracts, permits, and financial records. Negotiate escrow agreements or indemnifications to cover these risks, especially for environmental concerns which may require a Phase I Environmental Site Assessment.","url":"https://dealroom.so/glossary/potential-liabilities","official_sources":[],"related":[{"slug":"existing-litigation","term":"Existing Litigation","url":"https://dealroom.so/glossary/existing-litigation"},{"slug":"liability","term":"Liability","url":"https://dealroom.so/glossary/liability"},{"slug":"due-diligence","term":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"environmental-questionnaire","term":"Environmental Questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"}],"related_questions":[{"question":"What happens if a required environmental report (Phase I ESA) identifies potential contamination?","url":"https://dealroom.so/sba-7a/questions/what-happens-if-a-required-environmental-report-phase-i-esa-identifies-potential-contamina"},{"question":"How do potential conflicts of interest with the seller, like shared services, affect approval?","url":"https://dealroom.so/sba-7a/questions/how-do-potential-conflicts-of-interest-with-the-seller-like-shared-services-affect-approva"},{"question":"What if the business I'm acquiring is losing money but has high growth potential?","url":"https://dealroom.so/sba-7a/questions/what-if-the-business-i-m-acquiring-is-losing-money-but-has-high-growth-potential"},{"question":"What if a lender's internal loan review discovers a potential eligibility issue post-closing?","url":"https://dealroom.so/for-lenders/questions/what-if-a-lender-s-internal-loan-review-discovers-a-potential-eligibility-issue-post-closi"},{"question":"What happens if the business being acquired has significant outstanding tax liabilities at closing?","url":"https://dealroom.so/for-lenders/questions/what-happens-if-the-business-being-acquired-has-significant-outstanding-tax-liabilities-at"},{"question":"What if the business I want to acquire has undisclosed liabilities discovered during due diligence?","url":"https://dealroom.so/sba-7a/questions/what-if-the-business-i-want-to-acquire-has-undisclosed-liabilities-discovered-during-due-d"}]},"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 — Potential Liabilities","url":"https://dealroom.so/glossary/potential-liabilities","source_type":"DealRoom Data"}}