{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/if-the-acquired-business-has-a-recent-history-of-losses-but-a-strong-projection-under-new-","api_url":"https://dealroom.so/api/public/questions/if-the-acquired-business-has-a-recent-history-of-losses-but-a-strong-projection-under-new-","question":"If the acquired business has a recent history of losses, but a strong projection under new ownership, can it still be approved?","topic":"What kills approval","audience":"borrower","bot_mode":"buyer","short_answer":"It can be approved, but a recent history of losses makes approval more challenging. The lender will require a compelling explanation for the losses and robust, well-supported projections under your new management.","rule":"While the SBA prefers businesses with positive historical cash flow, a business with a recent history of losses can be eligible if the buyer presents a credible business plan demonstrating how the losses will be reversed. This requires strong, justifiable projections supported by the buyer's experience and specific operational changes.","example":"A buyer wants to acquire a business that lost $50,000 last year but has a detailed plan for cost reductions and new revenue streams, projecting $100,000 profit in year one. The lender will scrutinize this plan and the buyer's ability to execute it.","what_lenders_check":"Lenders are inherently cautious about businesses with losses, as it indicates higher risk. They will require significant justification for the turnaround plan, often looking for substantial equity injection or collateral to offset the heightened risk.","required_facts":["Recent history of losses","Strong projections","New ownership plan","Compelling explanation","Higher risk"],"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 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":"Business Projection","url":"https://dealroom.so/glossary/business-projection"},{"term":"New Business Entity","url":"https://dealroom.so/glossary/new-business-entity"},{"term":"Business credit history","url":"https://dealroom.so/glossary/business-credit-history"},{"term":"Carryover losses","url":"https://dealroom.so/glossary/carryover-losses"},{"term":"Projection","url":"https://dealroom.so/glossary/projection"},{"term":"New venture","url":"https://dealroom.so/glossary/new-venture"}],"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-the-acquired-business-has-a-recent-history-of-losses-but-a-strong-projection-under-new-","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."]}