For SBA lenders
Short answer
Lenders evaluate purchase price reasonableness based on a business valuation from a qualified third party, ensuring the price aligns with fair market value, regardless of seller note subordination.
For change-of-ownership transactions, particularly those over $500,000, the SBA requires an independent business valuation performed by a qualified appraiser. The valuation must support the purchase price, and while a fully subordinated seller note is treated as equity for injection purposes, it does not alter the requirement for the purchase price itself to be reasonable and supported by the valuation.
A business is being acquired for $1.5 million, with a $200,000 seller note on full standby. The lender would require an independent business valuation for the $1.5 million purchase price to ensure it represents fair market value, irrespective of the seller note's terms.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
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.
More on change-of-ownership underwriting
Terms in this answer
Pre-qualify your SBA 7(a) deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to fund a deal like yours and flag anything that trips up approval.
Free · No documents · Usually same-day