For SBA lenders
Short answer
A temporary revenue decline during due diligence does not automatically kill the deal, but the lender will require a thorough explanation, analysis of the cause, and projections demonstrating a strong likelihood of recovery and repayment capacity post-acquisition.
Lenders analyze historical and projected cash flow. A recent decline requires careful underwriting to distinguish between a temporary, explainable dip (e.g., seasonal, one-time event) and a systemic problem indicating a failing business. The borrower's projections must convincingly demonstrate how they will restore profitability.
A business's revenue drops 15% in Q1 due to a major road construction project impacting access. The lender would require detailed financial statements, a letter from the borrower explaining the specific impact, and credible projections showing recovery once the construction is complete, supported by market data or historical performance in similar situations.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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