{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/if-i-m-buying-out-a-partner-how-does-the-sba-ensure-the-fair-market-value-of-the-departing","api_url":"https://dealroom.so/api/public/questions/if-i-m-buying-out-a-partner-how-does-the-sba-ensure-the-fair-market-value-of-the-departing","question":"If I'm buying out a partner, how does the SBA ensure the fair market value of the departing partner's share is established?","topic":"Partner buyouts","audience":"borrower","bot_mode":"buyer","short_answer":"For a partner buyout, the SBA requires an independent business valuation from a qualified appraiser to establish the fair market value of the departing partner's share and the overall business.","rule":"When an SBA loan is used to finance a partner buyout, an independent valuation of the business is mandatory if the total financing exceeds $250,000. This valuation determines the fair market value of the business and, by extension, the departing partner's ownership stake. This ensures that the loan amount is reasonable for the value being acquired and prevents inflated purchase prices.","example":"You are buying out a partner for $400,000. The lender will require an independent business valuation to confirm that the $400,000 represents a fair price for that partner's ownership percentage based on the overall business value, for example, a business valued at $800,000 if your partner owns 50%.","what_lenders_check":"Lenders rely on independent valuations to ensure the loan amount is justified by the business's actual value, especially in related-party transactions like partner buyouts. This protects against over-financing and potential fraud.","required_facts":["Independent valuation","Qualified appraiser","Fair market value","Departing partner's share","Loan amount threshold"],"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":"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":"M&A advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"term":"Market value","url":"https://dealroom.so/glossary/market-value"},{"term":"Fair market rent","url":"https://dealroom.so/glossary/fair-market-rent"}],"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/if-i-m-buying-out-a-partner-how-does-the-sba-ensure-the-fair-market-value-of-the-departing","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."]}