For SBA lenders
Short answer
Lenders must perform due diligence on accounts receivable, including aging reports, customer concentration analysis, and verification of collectability, especially if they are part of the acquisition's collateral base.
When accounts receivable (A/R) are part of an acquisition, especially if used as collateral, lenders must assess their quality. This involves reviewing A/R aging schedules, identifying major customers (customer concentration), and evaluating historical collection rates and write-offs. Uncollectible or aged A/R should be discounted or excluded from valuation.
A lender underwriting a $1 million business acquisition reviews the target company's A/R. The aging report shows $150,000 in A/R, but $40,000 is over 120 days old, and one customer accounts for 60% of current A/R. The lender discounts the aged A/R and requires additional analysis on the concentrated customer's payment history.
Insider move
The primary concern is the actual value and collectability of the A/R. Lenders must protect the collateral position by ensuring A/R is current and diversified. High customer concentration or significantly aged A/R increases risk and may impact the collateral value and the business's ongoing cash flow, warranting careful underwriting.
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
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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