{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/how-is-the-purchase-price-for-a-partner-buyout-determined-for-sba-loan-purposes","api_url":"https://dealroom.so/api/public/questions/how-is-the-purchase-price-for-a-partner-buyout-determined-for-sba-loan-purposes","question":"How is the purchase price for a partner buyout determined for SBA loan purposes?","topic":"Partner buyouts","audience":"borrower","bot_mode":"buyer","short_answer":"For SBA loan purposes, the purchase price for a partner buyout is typically determined by an independent business valuation.","rule":"If the purchase price of a partner buyout exceeds $500,000, or if there's any indication of an arm's-length transaction not being met (e.g., family members), an independent business valuation from a qualified appraiser is required by the SBA. This ensures the purchase price reflects the fair market value of the ownership interest being acquired.","example":"Two partners own a business valued at $1,200,000. One partner buys out the other's 50% share for $600,000. An independent valuation confirming this $600,000 as fair market value for the 50% stake would be mandatory for SBA financing.","what_lenders_check":"Lenders must ensure the purchase price is justified by fair market value to prevent over-financing and protect the SBA guaranty. They rely heavily on independent valuations, especially for transactions between existing partners or related parties.","required_facts":["Independent business valuation","Purchase price over $500K","Fair market value","Arm's-length transaction"],"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":"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-for-sba-loan-purposes","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."]}