Glossary · Doing the deal
Debt compromise
In short
Debt compromise is an agreement where a lender accepts a lower amount than what is originally owed to settle a debt. If the business you're buying has outstanding debts, a compromise might reduce your inherited liabilities.
What it means in a deal
When acquiring a business with significant outstanding debt, especially if it's underperforming, you might negotiate a debt compromise with existing creditors. This can significantly reduce the liabilities you take on, improving the deal's financial viability. However, it requires careful negotiation and a clear plan for the business's future.
Related terms
Common questions about Debt compromise
- What is the specific lender process for obtaining SBA approval for a debt compromise offer from a borrower in liquidation?
- What is the process for a 7(a) lender to obtain SBA approval for a debt compromise offer with a borrower in liquidation?
- How is prior owner debt converted to equity treated for injection purposes?
- Can I use an SBA 7(a) loan to refinance existing business debt?
- Can an SBA 7(a) loan be used to refinance existing business debt?
- Can I use an SBA 7(a) loan to pay off personal debt?
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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