{"ok":true,"canonical_url":"https://dealroom.so/glossary/formal-appraisal","api_url":"https://dealroom.so/api/public/glossary/formal-appraisal","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"formal-appraisal","term":"Formal appraisal","group":"Reading the business","definition":"An independent, professional valuation of assets or the business itself by a qualified appraiser. It determines fair market value for financing.","what_it_means":"For SBA 7(a) loans, a formal business valuation or appraisal is often required, especially for larger loans or when goodwill is a significant asset. The lender will order this, and you'll typically pay for it. The appraisal helps confirm the business's value, justifies the purchase price, and assesses collateral. Pay attention to the valuation methodology and assumptions.","url":"https://dealroom.so/glossary/formal-appraisal","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"business-valuation","term":"Business valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"appraisal","term":"Appraisal","url":"https://dealroom.so/glossary/appraisal"},{"slug":"fair-market-value","term":"Fair market value","url":"https://dealroom.so/glossary/fair-market-value"},{"slug":"goodwill","term":"Goodwill","url":"https://dealroom.so/glossary/goodwill"}],"related_questions":[{"question":"Can a lender accept a \"soft offer\" for collateral in liquidation, or is a formal appraisal always required for disposition?","url":"https://dealroom.so/for-lenders/questions/can-a-lender-accept-a-soft-offer-for-collateral-in-liquidation-or-is-a-formal-appraisal-al"},{"question":"Does an SBA 7(a) loan require a formal appraisal for business assets if the purchase price is below $500,000?","url":"https://dealroom.so/sba-7a/questions/does-an-sba-7-a-loan-require-a-formal-appraisal-for-business-assets-if-the-purchase-price-"},{"question":"Does the SBA require me to create a formal business plan to apply?","url":"https://dealroom.so/sba-loans/basics/does-the-sba-require-me-to-create-a-formal-business-plan-to-apply"},{"question":"Do I need a formal business plan to apply for an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/do-i-need-a-formal-business-plan-to-apply-for-an-sba-7-a-loan"},{"question":"What specific due diligence is required for an unlisted franchise agreement lacking SBA formal review?","url":"https://dealroom.so/for-lenders/questions/what-specific-due-diligence-is-required-for-an-unlisted-franchise-agreement-lacking-sba-fo"},{"question":"Is an independent appraisal always required when an acquisition includes significant goodwill?","url":"https://dealroom.so/sba-7a/questions/is-an-independent-appraisal-always-required-when-an-acquisition-includes-significant-goodw"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Formal appraisal","url":"https://dealroom.so/glossary/formal-appraisal","source_type":"DealRoom Data"}}