Glossary · Reading the business
Existing Debt Obligation
In short
These are any outstanding debts the business currently owes. You need to know if these will be paid off at closing or assumed by you.
What it means in a deal
During Due diligence, get a complete list of the seller's business debts, including UCC lien filings. Determine which, if any, will be assumed as part of the Asset purchase or Stock purchase, and ensure they are accounted for in the Total project costs. Most 7(a) deals require seller debt to be paid off at closing.
Related terms
Common questions about Existing Debt Obligation
- Can an SBA 7(a) loan be used to acquire an existing business with existing business debt?
- What happens to my personal guaranty obligation if I later sell the business?
- 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 existing personal debt?
- Can I use an SBA 7(a) loan to refinance my existing business 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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