Glossary · Reading the business
Financial Performance
In short
This refers to how well a business is doing financially, measured by its revenue, expenses, profits, and cash flow over time. It's the core of your due diligence.
What it means in a deal
Lenders analyze historical financial performance, typically for the past three years, to assess the business's ability to repay the SBA loan. You'll dig into the Profit and Loss Statements, Balance Sheets, and tax returns to verify the numbers and identify trends.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Financial Performance
- Can a significant change in the business's financial performance during due diligence kill approval?
- Are there specific financial performance requirements for a franchise to be eligible for SBA financing?
- Are there specific non-financial performance requirements for a franchise to be eligible for SBA 7(a) financing?
- How does a lender apply 'prudent lending standards' when evaluating a borrower's historical financial performance trends for a 7(a) loan?
- How often does the SBA require lenders to report on 7(a) loan portfolio performance?
- How often does the SBA require lenders to report on 7(a) loan portfolio performance for secondary market purposes?
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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