SBA 7(a) Q&A
Short answer
Yes, cash flow projections must be realistic, well-supported, and demonstrate the business's ability to repay the SBA loan, including the owner's salary, rather than being overly optimistic.
Lenders rely heavily on cash flow projections to assess repayment ability, especially for acquisitions. The SBA requires these projections to be conservative, based on historical performance, and clearly justify the business's capacity to service debt and fund operations.
For a $1.2 million acquisition, projected first-year revenues increasing by 50% without a clear, detailed marketing plan or demonstrable new contracts would be viewed as unrealistic and likely require significant justification or revision.
Insider move
Lenders scrutinize projections for inflated revenue, understated expenses, and unrealistic growth. They often compare projections to historical performance and industry benchmarks, pushing back on assumptions that appear overly aggressive.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. 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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