SBA 7(a) Q&A
Short answer
Yes, a significant drop in the buyer's projected post-acquisition cash flow, especially during underwriting, is a major concern and can kill SBA 7(a) loan approval.
Lenders rely heavily on robust cash flow projections to determine a business's ability to repay the SBA loan. If these projections significantly decline or become questionable during the underwriting process, it undermines the fundamental basis for the loan, indicating increased risk.
A buyer initially projected $300,000 in annual free cash flow for a target business, comfortably covering a $150,000 annual debt service. If revised projections, perhaps due to new market data or customer losses, show only $160,000 in free cash flow, the lender will likely decline the loan due to insufficient debt service coverage.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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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