SBA 7(a) Q&A
Short answer
Outstanding tax liabilities from the target business are a major issue and must typically be resolved or put on a repayment plan before loan closing.
SBA lenders require that businesses be current on all federal, state, and local taxes. Unresolved tax liens or significant outstanding tax debt indicates financial instability and can prevent loan approval until a satisfactory repayment plan is in place or the debt is paid off.
If the business you want to buy has $75,000 in unpaid payroll taxes, the lender will likely require these to be paid off at closing from the seller's proceeds, or a formal IRS installment agreement must be established, with the buyer assuming responsibility.
Insider move
Lenders are concerned about senior liens on assets (tax liens) and the business's financial discipline. They will verify tax status and ensure that any outstanding liabilities are addressed to protect the collateral and the business's cash flow.
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.
More on what kills approval
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