{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/when-buying-out-a-partner-how-does-the-sba-ensure-the-purchase-price-for-their-share-is-fa","api_url":"https://dealroom.so/api/public/questions/when-buying-out-a-partner-how-does-the-sba-ensure-the-purchase-price-for-their-share-is-fa","question":"When buying out a partner, how does the SBA ensure the purchase price for their share is fair?","topic":"Partner buyouts","audience":"borrower","bot_mode":"buyer","short_answer":"For partner buyouts, the SBA requires a business valuation to ensure the purchase price for the exiting partner's share is reasonable and supported.","rule":"A professional business valuation is mandatory for change of ownership transactions, including partner buyouts, to establish the fair market value of the business and thus the reasonableness of the purchase price for the partner's share. This protects against overpaying, which could jeopardize the business's ability to repay the loan.","example":"A partner is buying out their co-owner for $250,000. An independent business valuation determines the fair market value of the exiting partner's share is $240,000. The lender will use this valuation to assess the reasonableness of the $250,000 purchase price.","what_lenders_check":"Lenders require an independent business valuation for all change of ownership transactions to justify the purchase price. They ensure the valuation is conducted by a qualified professional and that the loan amount aligns with the business's value and repayment capacity.","required_facts":["Partner buyout","Business valuation","Fair market value","Reasonable price","Repayment capacity"],"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":"Purchase price","url":"https://dealroom.so/glossary/purchase-price"},{"term":"Purchase price allocation","url":"https://dealroom.so/glossary/purchase-price-allocation"},{"term":"Buyout of a Partner","url":"https://dealroom.so/glossary/buyout-of-a-partner"},{"term":"SBA resource partner","url":"https://dealroom.so/glossary/sba-resource-partner"},{"term":"Partner","url":"https://dealroom.so/glossary/partner"},{"term":"Ownership Share","url":"https://dealroom.so/glossary/ownership-share"}],"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-ensure-the-purchase-price-for-their-share-is-fa","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."]}