Glossary · Reading the business
In short
A bankruptcy case still open and not yet finalized by the court. For buyers, an undischarged bankruptcy for the seller or key principals is a significant red flag that can prevent SBA loan approval.
If a seller or any key principal has an undischarged bankruptcy, it generally makes the business ineligible for an SBA 7(a) loan. This signals high financial risk to lenders. You need to verify the bankruptcy status of all key individuals involved in the seller's business during due diligence.
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
SBA Form 1919 — Borrower Information Form
U.S. Small Business Administration · SBA form
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.
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