{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/how-is-the-purchase-price-determined-for-an-sba-7-a-partner-buyout","api_url":"https://dealroom.so/api/public/questions/how-is-the-purchase-price-determined-for-an-sba-7-a-partner-buyout","question":"How is the purchase price determined for an SBA 7(a) partner buyout?","topic":"Partner buyouts","audience":"borrower","bot_mode":"buyer","short_answer":"The purchase price for an SBA 7(a) partner buyout is typically determined by an arm's length agreement, but it must be supported by an independent third-party business valuation.","rule":"For partner buyouts, particularly when there is a significant change in ownership, the SBA requires an independent valuation to ensure the purchase price is fair and reasonable. This valuation helps protect against inflated asset values or inappropriate uses of loan funds. The valuation must be performed by a qualified appraiser.","example":"A buyer is acquiring their 70% partner's share of a business for $700,000. While they agree on this price, an independent business valuation comes back at $900,000 for the entire business. The SBA loan will be based on the validated value, ensuring the $700,000 for the 70% stake is reasonable.","what_lenders_check":"Lenders require a qualified, independent business valuation to substantiate the purchase price. They ensure the valuation adheres to SBA guidelines, mitigating risks of overfinancing or funding an unsubstantiated purchase.","required_facts":["Partner buyout","Purchase price","Independent valuation","Qualified appraiser"],"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":"If I'm buying out a partner, does the remaining partner also need to personally guarantee the SBA loan for $500,000?","url":"https://dealroom.so/sba-7a/questions/if-i-m-buying-out-a-partner-does-the-remaining-partner-also-need-to-personally-guarantee-t"},{"question":"If I am buying out a partner, does the SBA require the business to pass a cash flow test post-acquisition?","url":"https://dealroom.so/sba-7a/questions/if-i-am-buying-out-a-partner-does-the-sba-require-the-business-to-pass-a-cash-flow-test-po"},{"question":"If I am buying out a partner, how does the SBA ensure the purchase price is fair and justifiable?","url":"https://dealroom.so/sba-7a/questions/if-i-am-buying-out-a-partner-how-does-the-sba-ensure-the-purchase-price-is-fair-and-justif"},{"question":"Can an SBA 7(a) loan be used to purchase a business if the seller will retain a minority ownership stake?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-purchase-a-business-if-the-seller-will-retain-a-minority-ow"},{"question":"What are the requirements for the seller in an SBA 7(a) business acquisition loan?","url":"https://dealroom.so/sba-7a/questions/what-are-the-requirements-for-the-seller-in-an-sba-7-a-business-acquisition-loan"},{"question":"Can an SBA 7(a) loan be used to fund a partner buyout with an earn-out provision?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-fund-a-partner-buyout-with-an-earn-out-provision"}],"related_terms":[{"term":"Buyout of a Partner","url":"https://dealroom.so/glossary/buyout-of-a-partner"},{"term":"Partner buyout","url":"https://dealroom.so/glossary/partner-buyout"},{"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"}],"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/sba-7a/questions/how-is-the-purchase-price-determined-for-an-sba-7-a-partner-buyout","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."]}