{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-verify-the-fair-market-value-of-assets-contributed-as-equity-injection","api_url":"https://dealroom.so/api/public/questions/how-does-the-sba-verify-the-fair-market-value-of-assets-contributed-as-equity-injection","question":"How does the SBA verify the fair market value of assets contributed as equity injection?","topic":"Equity Injection Components","audience":"borrower","bot_mode":"buyer","short_answer":"The SBA requires lenders to verify the fair market value of assets contributed as equity through independent third-party appraisals or other reliable valuation methods.","rule":"When a borrower contributes non-cash assets (like equipment or real estate) as part of the equity injection, the lender must obtain an independent valuation to confirm their fair market value. For real estate, an appraisal is required. For equipment, a qualified appraiser or other verifiable market-based method may be used, ensuring the value is accurate and unencumbered.","example":"If a buyer contributes a piece of machinery they own, valued at $75,000, as part of their equity, the lender will require a certified equipment appraisal from an independent appraiser. This appraisal confirms the market value and ensures the asset is free of any liens before it can be accepted as equity.","what_lenders_check":"Lenders are diligent in preventing inflated valuations of non-cash assets. They ensure appraisals are recent, from qualified professionals, and that the assets are free of any undisclosed liens or encumbrances, providing true equity to the business.","required_facts":["Asset contribution","Fair market value","Independent appraisal","Third-party verification","Unencumbered assets"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","7(a) Loan Program Terms, Conditions, and Eligibility"],"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"},{"title":"7(a) Loan Program Terms, Conditions, and Eligibility","url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility"}],"related_questions":[{"question":"How is existing equipment I own valued for my equity injection into the acquired business?","url":"https://dealroom.so/sba-7a/questions/how-is-existing-equipment-i-own-valued-for-my-equity-injection-into-the-acquired-business"},{"question":"Can a buyer's assumption of existing business debt count as part of the equity injection?","url":"https://dealroom.so/sba-7a/questions/can-a-buyer-s-assumption-of-existing-business-debt-count-as-part-of-the-equity-injection"},{"question":"Can I use proceeds from selling personal real estate as an equity injection after closing?","url":"https://dealroom.so/sba-7a/questions/can-i-use-proceeds-from-selling-personal-real-estate-as-an-equity-injection-after-closing"}],"related_terms":[{"term":"Fair market value","url":"https://dealroom.so/glossary/fair-market-value"},{"term":"Net fair market value","url":"https://dealroom.so/glossary/net-fair-market-value"},{"term":"Business Fair Market Value","url":"https://dealroom.so/glossary/business-fair-market-value"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"term":"Lower of cost or fair market value","url":"https://dealroom.so/glossary/lower-of-cost-or-fair-market-value"},{"term":"Market value","url":"https://dealroom.so/glossary/market-value"}],"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":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-verify-the-fair-market-value-of-assets-contributed-as-equity-injection","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."]}