{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/what-if-the-business-i-m-acquiring-is-currently-experiencing-declining-revenues","api_url":"https://dealroom.so/api/public/questions/what-if-the-business-i-m-acquiring-is-currently-experiencing-declining-revenues","question":"What if the business I'm acquiring is currently experiencing declining revenues?","topic":"What Kills Approval","audience":"borrower","bot_mode":"buyer","short_answer":"Declining revenues in the acquired business are a significant concern and can make SBA 7(a) loan approval difficult, unless a clear and credible turnaround plan is presented.","rule":"SBA lenders heavily rely on historical financial performance and projected cash flow to assess repayment ability. While a business with declining revenues isn't automatically ineligible, the borrower must demonstrate a compelling and well-supported plan to reverse the trend, including clear strategies and conservative financial projections. The lender must be convinced the decline is temporary and reversible.","example":"You are acquiring a retail business that has seen a 15% revenue decline over the past two years. To get SBA approval, you would need to present a detailed business plan outlining new marketing strategies, cost efficiencies, or product line changes that credibly show a return to profitability and sufficient cash flow to service the loan within 12-18 months.","what_lenders_check":"Lenders are inherently cautious about businesses with declining revenues, as it signals increased risk. They will scrutinize the cause of the decline, the buyer's experience, and the viability of the turnaround plan. Unrealistic projections will lead to denial.","required_facts":["Declining revenues","Repayment ability","Turnaround plan","Financial projections","Buyer experience"],"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":"Can a significant change in the business's financial performance during due diligence kill approval?","url":"https://dealroom.so/sba-7a/questions/can-a-significant-change-in-the-business-s-financial-performance-during-due-diligence-kill"},{"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"}],"related_terms":[{"term":"Acquiring entity","url":"https://dealroom.so/glossary/acquiring-entity"},{"term":"Alienate the Business","url":"https://dealroom.so/glossary/alienate-the-business"},{"term":"M&A advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"term":"Pre-approval","url":"https://dealroom.so/glossary/pre-approval"},{"term":"Credit approval","url":"https://dealroom.so/glossary/credit-approval"},{"term":"Guaranty Approval","url":"https://dealroom.so/glossary/guaranty-approval"}],"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/what-if-the-business-i-m-acquiring-is-currently-experiencing-declining-revenues","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."]}