{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/if-key-employees-resign-during-due-diligence-could-this-kill-the-sba-loan-approval","api_url":"https://dealroom.so/api/public/questions/if-key-employees-resign-during-due-diligence-could-this-kill-the-sba-loan-approval","question":"If key employees resign during due diligence, could this kill the SBA loan approval?","topic":"What kills approval","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, the resignation of key employees during due diligence could significantly jeopardize or kill an SBA 7(a) loan approval, as it impacts the business's stability and operational continuity.","rule":"The SBA and lenders assess the acquired business's ability to operate successfully post-acquisition. The departure of key employees (e.g., top sales staff, essential technicians, managers) can severely impact the business's revenue generation, customer relationships, and operational capabilities. This change introduces significant risk, causing the lender to question the viability of the business and its ability to repay the loan.","example":"You are acquiring a marketing agency heavily reliant on its creative director and two senior account managers. If all three resign during your due diligence period, the lender would likely pause or decline the loan, as the business's core operational strength and client retention would be severely compromised.","what_lenders_check":"Lenders value continuity and stability, especially in service-based businesses. The loss of key personnel is a major red flag, indicating potential revenue decline and operational disruption, which directly impacts the borrower's ability to service the debt.","required_facts":["Key employee departure","Business stability","Operational continuity","Revenue generation","Customer relationships"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","7(a) Loan Program Terms, Conditions, and Eligibility"],"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"},{"title":"7(a) Loan Program Terms, Conditions, and Eligibility","url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility"}],"related_questions":[{"question":"What if the business I'm acquiring has poor historical cash flow or declining revenues for the last two years?","url":"https://dealroom.so/sba-7a/questions/what-if-the-business-i-m-acquiring-has-poor-historical-cash-flow-or-declining-revenues-for"},{"question":"Can a high customer concentration (e.g., one customer is 50% of revenue) jeopardize my SBA 7(a) loan approval?","url":"https://dealroom.so/sba-7a/questions/can-a-high-customer-concentration-e-g-one-customer-is-50-of-revenue-jeopardize-my-sba-7-a-"},{"question":"What common issues can cause an SBA 7(a) loan application to be denied?","url":"https://dealroom.so/sba-7a/questions/what-common-issues-can-cause-an-sba-7-a-loan-application-to-be-denied"},{"question":"Can an SBA 7(a) loan be used to purchase a business that is currently unprofitable?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-purchase-a-business-that-is-currently-unprofitable"},{"question":"What happens if the acquired business declines significantly during the loan underwriting period?","url":"https://dealroom.so/sba-7a/questions/what-happens-if-the-acquired-business-declines-significantly-during-the-loan-underwriting-"},{"question":"What if the business I'm buying has existing tax liens or other government debts?","url":"https://dealroom.so/sba-7a/questions/what-if-the-business-i-m-buying-has-existing-tax-liens-or-other-government-debts"}],"related_terms":[{"term":"Key employees","url":"https://dealroom.so/glossary/key-employees"},{"term":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"},{"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/if-key-employees-resign-during-due-diligence-could-this-kill-the-sba-loan-approval","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."]}