{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/what-if-the-business-i-m-buying-has-a-temporary-decline-in-revenue-during-the-due-diligenc","api_url":"https://dealroom.so/api/public/questions/what-if-the-business-i-m-buying-has-a-temporary-decline-in-revenue-during-the-due-diligenc","question":"What if the business I'm buying has a temporary decline in revenue during the due diligence period?","topic":"What kills approval","audience":"borrower","bot_mode":"buyer","short_answer":"A temporary decline might not kill approval if it's explained and mitigated, but a significant, unexplained, or unmitigated drop could halt or deny the loan.","rule":"Lenders evaluate the business's historical and projected cash flow to ensure repayment ability. If a revenue decline occurs during due diligence, the lender will require a clear explanation, a realistic plan to recover, and verification that the decline is not indicative of a long-term problem or a fundamental flaw in the business model.","example":"A business has a seasonal dip in revenue during a particular quarter. If the buyer can demonstrate this is normal for the business and has a strong recovery plan for the next quarter, the loan may proceed. However, a 20% drop due to losing a major client without a replacement plan would be problematic.","what_lenders_check":"Lenders are wary of declining trends, as they directly impact projected cash flow and repayment capacity. They will require detailed analysis, credible explanations, and strong mitigation strategies before proceeding.","required_facts":[],"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":"M&A advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"term":"Temporary Deferment","url":"https://dealroom.so/glossary/temporary-deferment"},{"term":"Alienate the Business","url":"https://dealroom.so/glossary/alienate-the-business"},{"term":"Revenue","url":"https://dealroom.so/glossary/revenue"},{"term":"Temporary visa holder","url":"https://dealroom.so/glossary/temporary-visa-holder"},{"term":"Due diligence","url":"https://dealroom.so/glossary/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/what-if-the-business-i-m-buying-has-a-temporary-decline-in-revenue-during-the-due-diligenc","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."]}