{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-evaluate-the-reasonableness-of-the-purchase-price-in-a-7-a-change-of-owne","api_url":"https://dealroom.so/api/public/questions/how-does-the-sba-evaluate-the-reasonableness-of-the-purchase-price-in-a-7-a-change-of-owne","question":"How does the SBA evaluate the reasonableness of the purchase price in a 7(a) change-of-ownership transaction?","topic":"Change-of-Ownership","audience":"lender","bot_mode":"lender","short_answer":"The SBA evaluates the reasonableness of the purchase price by requiring an independent business valuation for transactions involving goodwill or exceeding a certain threshold, ensuring the price is supported by the business's earnings and asset value.","rule":"For a change-of-ownership, especially those with significant goodwill or exceeding $500,000, the SBA typically requires an independent, qualified business valuation. This valuation must support the purchase price to ensure the borrower is not overpaying and that the business has sufficient cash flow to service the debt.","example":"A buyer proposes a $1.2 million purchase price for a business. The lender orders a third-party business valuation. If the valuation comes back at $1.0 million, the lender must work with the buyer and seller to adjust the purchase price or inject additional equity to cover the shortfall, as the SBA will only finance the supported value.","what_lenders_check":"Lenders must ensure the purchase price is justified by an independent valuation that adheres to SBA standards. Financing an unsupported purchase price can lead to an ineligible loan, potential default risk, and a guaranty repair if the business cannot sustain the debt.","required_facts":["Purchase price","Reasonableness","Independent valuation","Goodwill","Earnings support","Asset value"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"}],"related_questions":[{"question":"For a change-of-ownership, what is required if the seller wishes to remain as a paid consultant post-closing?","url":"https://dealroom.so/for-lenders/questions/for-a-change-of-ownership-what-is-required-if-the-seller-wishes-to-remain-as-a-paid-consul"}],"related_terms":[{"term":"Purchase price","url":"https://dealroom.so/glossary/purchase-price"},{"term":"SBA 7(a) program","url":"https://dealroom.so/glossary/sba-7-a-program"},{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"term":"Purchase price allocation","url":"https://dealroom.so/glossary/purchase-price-allocation"},{"term":"Change in ownership","url":"https://dealroom.so/glossary/change-in-ownership"},{"term":"SBA 7(a) Loan Program","url":"https://dealroom.so/glossary/sba-7-a-loan-program"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-evaluate-the-reasonableness-of-the-purchase-price-in-a-7-a-change-of-owne","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}