SBA 7(a) Q&A
Short answer
A temporary decline in revenue during due diligence is a serious concern, but it won't automatically kill the deal if adequately explained and the business remains viable.
Lenders evaluate the historical and projected financial performance of the business. A recent, temporary decline will require a thorough explanation (e.g., seasonal dip, one-time event) and strong evidence that the business will rebound and maintain sufficient cash flow to service the debt.
If a landscaping business shows a 20% revenue drop in Q4 during due diligence due to winter seasonality, the lender will accept this with historical data showing seasonal patterns, but an unexplained decline in peak season would be problematic.
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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