For SBA lenders
Short answer
A lender generally needs a formal appraisal or other credible valuation for collateral disposition in liquidation, especially for significant assets, rather than solely relying on a "soft offer."
While a lender should always pursue the most commercially reasonable method of disposition to maximize recovery, relying solely on an informal "soft offer" without corroborating valuation (e.g., formal appraisal, broker's opinion of value, or competitive bids) is generally not considered prudent. For substantial collateral, a formal appraisal or at least a documented market analysis is expected to justify the sale price.
A defaulted 7(a) loan is secured by commercial real estate. A potential buyer verbally offers $500,000. The lender, to ensure a commercially reasonable disposition, commissions an independent appraisal that values the property at $550,000 and then conducts a formal marketing process to solicit competitive bids before accepting the best offer.
Insider move
Lenders must demonstrate commercially reasonable efforts to maximize recovery on collateral during liquidation. Accepting a "soft offer" without sufficient valuation support could be viewed as imprudent, leading to a repair or reduction in the SBA's guaranty purchase for the shortfall.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 57 - 7(a) Loan Servicing and Liquidation
Universal Purchase Package (UPP)
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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