Glossary · Doing the deal
Condition Precedent to Closing
In short
Specific requirements that must be met by both buyer and seller before the deal can legally close. Failing to satisfy these can kill the deal.
What it means in a deal
Your LOI and purchase agreement will detail these conditions, like securing your SBA loan, completing due diligence, getting landlord approval for a lease assignment, or obtaining specific licenses. Both parties must actively work to fulfill their conditions, or the closing date will slip, or the deal may fall apart.
Related terms
Common questions about Condition Precedent to Closing
- What if a loan authorization requires a specific condition precedent to closing that is not met?
- What constitutes a "material adverse change" in a borrower's financial condition that requires lender action prior to closing?
- What if a Phase I ESA identifies a Recognized Environmental Condition (REC) but deems it a 'de minimis' condition?
- When is life insurance on key principals a mandatory loan condition?
- What steps should a lender take if a Phase I ESA identifies a Recognized Environmental Condition (REC)?
- When a Phase I Environmental Site Assessment (ESA) identifies a Recognized Environmental Condition (REC), what are the lender's subsequent responsibilities?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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