Hi SF Community

I'm reaching out for advice on a situation I've encountered in my journey of acquiring a business.

Last year, I embarked on a search and eventually settled on a prospect. The business, a DBA under a corporation, has been operational for four years. It has annual sales of approximately $1.7 million and an SDE of $250k. The purchase price was set at $500k. The sellers are eager to shift industries, The sellers had another DBA under the same corporation.

Due to the deal size, I opted to conduct due diligence independently. The financials were marred by poor accounting, had substantial cash transactions which is common in this industry and were challenging to decipher. The sellers were both operators and attributed the bad state of their books to lack of sophistication about book keeping and poor advice from a former accountant. After an arduous process, I believed I had a good grasp of the business's financial health and proceeded to secure an SBA loan and signed the loan commitment letter and paid the necessary fees, including an escrow fee to the seller's attorney. We are proceeding to loan closing in a couple of weeks.

However, in a recent review of the financial and bank statements, I uncovered a critical oversight: the sellers had been inflating revenues by moving funds from their other business and covering its expenses through these transfers. This discovery, made within the last 24 hours, has yet been shared with the sellers or the bank. I fully intend to inform the bank and the sellers as soon as possible. I'm seeking community's wisdom and experience in navigating this situation:
How should I approach the sellers and the bank with this discovery? Are there specific legal or financial repercussions I should be prepared for? Any advice on protecting my interests and possibly renegotiating or withdrawing from the deal?

I greatly appreciate any insights or experiences you can share.

Thank you for your time and support.