{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/if-the-business-i-m-buying-has-a-temporary-decline-in-revenue-during-due-diligence-will-it","api_url":"https://dealroom.so/api/public/questions/if-the-business-i-m-buying-has-a-temporary-decline-in-revenue-during-due-diligence-will-it","question":"If the business I'm buying has a temporary decline in revenue during due diligence, will it kill the deal?","topic":"What kills approval","audience":"borrower","bot_mode":"buyer","short_answer":"A temporary decline in revenue during due diligence is a serious concern, but it won't automatically kill the deal if adequately explained and the business remains viable.","rule":"Lenders evaluate the historical and projected financial performance of the business. A recent, temporary decline will require a thorough explanation (e.g., seasonal dip, one-time event) and strong evidence that the business will rebound and maintain sufficient cash flow to service the debt.","example":"If a landscaping business shows a 20% revenue drop in Q4 during due diligence due to winter seasonality, the lender will accept this with historical data showing seasonal patterns, but an unexplained decline in peak season would be problematic.","what_lenders_check":"Lenders are concerned about the business's ability to repay the loan. They will scrutinize the cause of the revenue decline, its expected duration, and the buyer's plan to mitigate its impact, ensuring the business's long-term viability isn't compromised.","required_facts":["Revenue decline reason","Temporary vs. permanent","Business viability","Cash flow impact","Buyer mitigation plan"],"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":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"},{"term":"M&A advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"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":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/if-the-business-i-m-buying-has-a-temporary-decline-in-revenue-during-due-diligence-will-it","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."]}