{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/how-is-the-valuation-of-an-exiting-partner-s-share-handled-for-an-sba-loan","api_url":"https://dealroom.so/api/public/questions/how-is-the-valuation-of-an-exiting-partner-s-share-handled-for-an-sba-loan","question":"How is the valuation of an exiting partner's share handled for an SBA loan?","topic":"Partner buyouts","audience":"borrower","bot_mode":"buyer","short_answer":"The valuation of an exiting partner's share is typically based on a fair market valuation of the business. For transactions over $250,000, an independent valuation prepared by a qualified source is required to determine the business's fair market value.","rule":"When an SBA loan is used for a change of ownership, including a partner buyout, the purchase price must be justified by an independent business valuation for transactions exceeding $250,000. This ensures the loan amount is based on the actual value of the assets and goodwill being acquired, preventing over-financing.","example":"If you're buying out your partner's share for $400,000, and the business's total value is determined to be $800,000 by an independent appraiser, the loan for your partner's share would be based on this independently verified valuation.","what_lenders_check":"Lenders are concerned about paying an inflated price for a business, especially in related-party transactions like partner buyouts. The independent valuation provides assurance that the purchase price, and thus the loan amount, is reasonable and supportable.","required_facts":["Fair market valuation","Independent appraisal","Qualified source","Transactions over $250k","Justify purchase price"],"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":"SBA resource partner","url":"https://dealroom.so/glossary/sba-resource-partner"},{"term":"Cancellation of the SBA guaranty","url":"https://dealroom.so/glossary/cancellation-of-the-sba-guaranty"},{"term":"Partner","url":"https://dealroom.so/glossary/partner"},{"term":"Breach of the Loan Agreement","url":"https://dealroom.so/glossary/breach-of-the-loan-agreement"},{"term":"Ownership Share","url":"https://dealroom.so/glossary/ownership-share"},{"term":"Assuming the loan","url":"https://dealroom.so/glossary/assuming-the-loan"}],"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-valuation-of-an-exiting-partner-s-share-handled-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."]}