Josh is correct in that your in-laws need to get with their agent; he/she needs to get with the lender and ensure that they are aware of the entire situation. Situations like this can be very tricky as there are a number of issues that should have/will need to be addressed.
Lenders are looking at self employed buyers and small business owners very carefully. Typically these are non conforming loans; the applicant doesn't have a "typical" job. Many lenders have stopped doing "non conforming" and "stated income" loans - I've seen times where loans have been pulled in mid stream.
If your in-laws own a home already, then this is in fact not their primary residence. There are many variable here, but suffice it to say that they can only have one primary residence; others are considered investment homes and lending parameters are different.
Not having the benefit of seeing the contract, here are my suggestions:
1. Have your lender tell you now whether or not they feel that this loan is viable. Time is of the essence here as you have a limited time for securing financing.
2. Have your agent carefully review the contract and the financing section, verify exactly how much time you have and if the option to cancel without penalty exists.
3. Discuss with your agent the options that exist should you already be past the expiration of the financing contingency. You may want to approach the sellers and negotiate an out.
Your agent should have taken the time to explain the potential financing issues that face your in-laws and what could happen in the event things fall apart. Your lender should have done the same. How the offer was written is another thing; did your agent write a strong offer that covered the potential financing issues and leave you with "escape clauses"?
Reading your post I can almost think that your father in-law owning this company came as a surprise to the lender; did they know this up front? Did your agent? Do you have an agent? There are a number of important things that either are missing or not clear in your post.
Bottom line is that you are bound to this contract unless you have an open and legitimate contingency. Without seeing how the contract is written it's impossible to render an opinion. If all contingency periods have closed, you may be bound to the contract and getting out of it will require negotiation with the seller. There's no way to say what the outcome might be, but it could range from loss of earnest money to suit for specific performance. They contracted to buy a home, they have a responsiblity to live up to that commitment.
An idea for you might be for your in-laws to co-sign on a loan for you. You need a competent agent with a strong working relationship with a reputable lender. I'd be happy to have a look at this if you'd like.
Hank Miller, SRA, ABR
Associate Broker & Certified Appraiser
REMAX Greater Atlanta