{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-a-significant-change-in-the-business-s-financial-performance-during-due-diligence-kill","api_url":"https://dealroom.so/api/public/questions/can-a-significant-change-in-the-business-s-financial-performance-during-due-diligence-kill","question":"Can a significant change in the business's financial performance during due diligence kill approval?","topic":"What Kills Approval","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, a significant decline in the target business's financial performance during due diligence can lead to loan denial, as it impacts the ability to repay.","rule":"Lenders underwrite loans based on the business's ability to generate sufficient cash flow to cover debt service. If the business experiences a material adverse change (MAC) in its financials during the due diligence period, its projected debt service coverage ratio may fall below acceptable levels, leading to a denial.","example":"If, during your 60-day due diligence period, the target business's monthly revenue drops by 30% and key customers depart, the lender will reassess their financial projections and likely determine the business can no longer support the proposed $800,000 SBA loan.","what_lenders_check":"Lenders continuously monitor the financial health of the target business throughout the due diligence and underwriting process. They look for any material changes that could compromise the business's ability to repay the loan and will require updated financial statements to verify performance.","required_facts":["Material adverse change (MAC)","Declining revenue/profit","Debt service coverage","Due diligence period"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"}],"related_questions":[{"question":"What are common reasons an SBA 7(a) loan application might be denied after extensive review?","url":"https://dealroom.so/sba-7a/questions/what-are-common-reasons-an-sba-7-a-loan-application-might-be-denied-after-extensive-review"},{"question":"Can incomplete or inconsistent financial projections lead to an SBA 7(a) loan denial?","url":"https://dealroom.so/sba-7a/questions/can-incomplete-or-inconsistent-financial-projections-lead-to-an-sba-7-a-loan-denial"},{"question":"What are the common deal-killing issues during underwriting of an SBA 7(a) acquisition loan?","url":"https://dealroom.so/sba-7a/questions/what-are-the-common-deal-killing-issues-during-underwriting-of-an-sba-7-a-acquisition-loan"},{"question":"Will the seller's refusal to provide certain financial documents jeopardize my SBA loan approval?","url":"https://dealroom.so/sba-7a/questions/will-the-seller-s-refusal-to-provide-certain-financial-documents-jeopardize-my-sba-loan-ap"},{"question":"What if the business I'm acquiring is currently experiencing declining revenues?","url":"https://dealroom.so/sba-7a/questions/what-if-the-business-i-m-acquiring-is-currently-experiencing-declining-revenues"}],"related_terms":[{"term":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"},{"term":"Financial Performance","url":"https://dealroom.so/glossary/financial-performance"},{"term":"Operational due diligence","url":"https://dealroom.so/glossary/operational-due-diligence"},{"term":"Legal due diligence","url":"https://dealroom.so/glossary/legal-due-diligence"},{"term":"Inadequate due diligence","url":"https://dealroom.so/glossary/inadequate-due-diligence"},{"term":"Heightened due diligence","url":"https://dealroom.so/glossary/heightened-due-diligence"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/can-a-significant-change-in-the-business-s-financial-performance-during-due-diligence-kill","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}