{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/how-is-the-purchase-price-for-a-partner-buyout-determined-and-justified-for-an-sba-loan","api_url":"https://dealroom.so/api/public/questions/how-is-the-purchase-price-for-a-partner-buyout-determined-and-justified-for-an-sba-loan","question":"How is the purchase price for a partner buyout determined and justified for an SBA loan?","topic":"Partner Buyouts","audience":"borrower","bot_mode":"buyer","short_answer":"The purchase price in a partner buyout must be supported by a professional business valuation, especially if it exceeds $500,000, to ensure fair market value.","rule":"For a change of ownership where the loan amount exceeds $500,000, a business valuation must be performed by a qualified independent third party. This valuation justifies the purchase price and ensures the transaction is at arm's length, even between existing partners.","example":"If you are buying out your partner's 50% share of a business for $600,000, and the total business value is $1.2 million, a qualified business valuation must be obtained to justify that $1.2 million value and the $600,000 buyout price.","what_lenders_check":"Lenders require an independent valuation to prevent over-financing and ensure the business can support the debt based on its true economic value. This is crucial in partner buyouts where conflicts of interest could arise.","required_facts":["Independent valuation","Fair market value","Loan amount over $500,000","Arm's length transaction"],"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":"Can an SBA 7(a) loan finance the purchase of a minority stake (e.g., 40%) in a business?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-finance-the-purchase-of-a-minority-stake-e-g-40-in-a-business"},{"question":"Can an SBA 7(a) loan finance the buyout of a partner who will remain active in the business?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-finance-the-buyout-of-a-partner-who-will-remain-active-in-the-business"},{"question":"How does a partner buyout impact the personal guarantee requirements for the remaining owner?","url":"https://dealroom.so/sba-7a/questions/how-does-a-partner-buyout-impact-the-personal-guarantee-requirements-for-the-remaining-own"}],"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":"Purchase price allocation","url":"https://dealroom.so/glossary/purchase-price-allocation"},{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"term":"SBA resource partner","url":"https://dealroom.so/glossary/sba-resource-partner"}],"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-is-the-purchase-price-for-a-partner-buyout-determined-and-justified-for-an-sba-loan","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."]}