2023 tax returns - not yet

searcher profile

March 26, 2024

by a searcher from University of South Carolina - Darla Moore School of Business in Charleston, SC, USA

I am set to close on a business by the end of April. Sellers do not have the 2023 tax returns yet (said they are going to be extended). The bank does not yet have their 2023 returns done yet.

Would anyone here be concerned with not having the 2023 returns yet? My accountant has reviewed bank statements and done a mini-QOE, but I'm a bit concerned that something could be misrepresented if taxes have not yet been reported.

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commentor profile
Reply by a lender
in United States
In the dynamic landscape of bank underwriting, I've observed diverse conditions being set by underwriters, especially concerning financial oversight. For instance, should a seller opt for an extension, some underwriters may require audited financial statements for the year ending###-###-#### Meanwhile, others might stipulate that the seller must file their 2023 Business Tax Returns (BTRs), furnish a copy to the lender, and grant the lender sufficient time to confirm the document's authenticity against IRS records before issuing a 'clear to close.'

This variance underscores a universal truth in our field: no two deals are identical and no two bank or non-bank lenders have identical credit policies on top of the SBA SOP. Each transaction presents unique strengths and challenges. The decision to proceed is often a reflection of the bank lender's credit policies and the comfort level of its decision-makers. It involves matching your transaction to the bank's criteria and highlighting its advantages. This approach smooths the way to closing, serving both your and the bank's best interests.


During this tax filing season, direct SBA lenders ought to guide both business buyers, sellers and brokers right from the start. They should clarify the requirements for 2023 taxes and or audited year-end statements. Without this initial guidance, parties involved may face significant closing delays—issues that could have been addressed with early discussions.
commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
It is not at all uncommon for tax returns to get extended. If you are confident in the financial results that have been provided and your due diligence has checked out to date, then you should have confidence nothing has changed. You can always review the bank statements to verify cash flow for the 2023 tax year.

Most lenders will take an extension if the 2023 tax return is not yet filed. It is very common for them to do so and I rarely see a lender not accept the extension. Usually the only time I see them not accept the extension is if they were relying on the 2023 taxes to be done for cash flow, in which case they should have told you up front that was the case and made that a condition in your loan approval. Still, I would check with your lender to see what they will want.

If you have additional questions you can reach me here or at redacted
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