Glossary · Reading the business
In short
A material liability is a significant financial obligation or risk that could negatively impact the business's value or future operations. These are major red flags during due diligence.
During your review of the business's financials and operations, look for undisclosed debts, ongoing litigation, environmental issues, or unfulfilled contractual obligations that could become a substantial financial burden post-acquisition. If a material liability is discovered, it could reduce the business's value, affect its ability to repay debt, or even lead to deal termination. Your attorney and accountant must thoroughly investigate any potential liabilities.
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
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.
Pressure-test the numbers before you make an offer
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.
Free · No documents · Usually same-day