{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/when-buying-out-a-partner-how-does-the-sba-assess-the-value-of-my-existing-ownership-stake","api_url":"https://dealroom.so/api/public/questions/when-buying-out-a-partner-how-does-the-sba-assess-the-value-of-my-existing-ownership-stake","question":"When buying out a partner, how does the SBA assess the value of my existing ownership stake?","topic":"Partner buyouts","audience":"borrower","bot_mode":"buyer","short_answer":"When buying out a partner, the SBA assesses the value of your existing ownership stake based on the business's fair market value, typically determined by a qualified independent business valuation.","rule":"The SBA requires a professional business valuation for any change of ownership where the loan amount exceeds certain thresholds. This valuation establishes the fair market value of the entire business, from which your existing ownership stake can be derived to confirm its contribution to the equity injection.","example":"A buyer owns 25% of a business with a fair market value of $1,200,000 as determined by an independent valuation. Their existing ownership stake is valued at $300,000, which contributes towards the equity injection for buying out the remaining partners.","what_lenders_check":"Lenders rely heavily on independent business valuations to confirm the fair market value of the business and, consequently, the value of the buyer's existing equity. They ensure the valuation is performed by a qualified appraiser.","required_facts":["Partner buyout","Existing ownership","Business valuation","Fair market value","Independent appraiser","Equity contribution"],"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":"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":"Out of pocket","url":"https://dealroom.so/glossary/out-of-pocket"},{"term":"SBA resource partner","url":"https://dealroom.so/glossary/sba-resource-partner"},{"term":"Assumption of Existing SBA Loan","url":"https://dealroom.so/glossary/assumption-of-existing-sba-loan"},{"term":"Cancellation of the SBA guaranty","url":"https://dealroom.so/glossary/cancellation-of-the-sba-guaranty"},{"term":"Partner","url":"https://dealroom.so/glossary/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/when-buying-out-a-partner-how-does-the-sba-assess-the-value-of-my-existing-ownership-stake","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."]}