Glossary · Doing the deal
Representations and warranties
In short
These are statements of fact made by the seller about the business at the time of sale, backed by a promise that they are true. They protect you if the business isn't as described.
What it means in a deal
Your purchase agreement will be packed with these. Scrutinize them during Due diligence to ensure they cover all critical aspects of the business, such as financials, contracts, and legal status. If they turn out to be false post-closing, you may have recourse against the seller, potentially involving an Escrow / holdback.
Related terms
Common questions about Representations and warranties
- What specific representations and warranties must a lender make when selling the guaranteed portion of a 7(a) loan?
- What specific representations and warranties does the SBA expect in a purchase agreement for a change-of-ownership loan?
- What if the seller's representations about the business's financials turn out to be significantly inaccurate during diligence?
- What is the relationship between SBA Form 1919 and 1920, and which is currently required for 7(a) loan applications?
- What is the ongoing annual service fee for a 7(a) loan, and how is it calculated and remitted by the lender?
- Which critical loan terms and borrower data must match precisely between the lender's system and E-Tran for 7(a) submissions?
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.
Line up financing while you're under LOI
Tell us the business, the price, and your timeline — we'll match you with lenders who close deals like yours and flag anything that stalls the process.
Free · No documents · Usually same-day
Backed by data on 1,000+ SBA lenders and 300,000+ funded deals. Your details go only to lending partners you ask to be matched with — never sold to advertisers.