Glossary · Reading the business
In short
A contingent liability is a potential future financial obligation that depends on the outcome of a future event. It's not a definite debt yet, but could become one.
During due diligence, look for contingent liabilities like pending lawsuits, unresolved tax audits, or product warranty claims. These liabilities aren't on the balance sheet as definite debts but could become significant costs post-acquisition. Understand the potential impact and negotiate protections like an escrow.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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