2026-02-11
Why SBA Deals Fall Apart Late (And How to Prevent It)
Why do SBA deals fall apart after approval?
Most SBA deals that fail do not collapse because the borrower or business is weak. They fall apart late in the process due to preventable issues that surface only after underwriting is underway. These include documentation gaps, structural mistakes, shifting lender credit policies, and simple timing fatigue.
At Port 51 Lending, we see these failures repeatedly and we also see how they can be avoided when issues are identified early.
The most common reasons SBA deals collapse late
1. Financials change mid-process
When revenue, expenses, or add-backs shift after submission, lenders are forced to re-underwrite the deal. This erodes confidence and delays closing.
Let’s get you ready: How to Prepare Your Financials for SBA Lender Review
2. Undisclosed debt or liabilities
Tax payment plans, shareholder notes, affiliate guarantees, or personal obligations often surface late through background checks or SBA review.
3. Equity injection problems
Equity must be clearly sourced, documented, and seasoned. When borrowers cannot prove where funds came from, deals stall or collapse.
Run through your checklist here: SBA 7(a) Approval Checklist for Companies
4. Seller fatigue in acquisitions
In acquisition deals, sellers lose patience as timelines extend. Delays create renegotiations or cause sellers to walk away.
Learn how you can avoid delays: Funding a Business Acquisition with an SBA 7(a) Loan
5. Internal lender reversals
Traditional banks can reverse approvals late in the process due to committee feedback, policy changes, or shifts in risk appetite. In addition, missing or revised purchase agreements between buyer and seller can materially affect the original loan approval.
How specialized SBA lenders reduce late-stage risk
- Issues identified early, not late
- Clear documentation expectations upfront
- Fewer internal approval layers
- Delegated SBA authority (PLP)
How borrowers can protect their deal
- Disclose everything upfront
- Lock financials before submission
- Choose lenders with SBA specialization
- Maintain deal discipline throughout underwriting
- Negotiate the terms of the deal with the seller up front; changes to the original agreement can jeopardize the loan approval.
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