For SBA lenders
Short answer
The SBA evaluates the reasonableness of the purchase price by requiring an independent business valuation for transactions involving goodwill or exceeding a certain threshold, ensuring the price is supported by the business's earnings and asset value.
For a change-of-ownership, especially those with significant goodwill or exceeding $500,000, the SBA typically requires an independent, qualified business valuation. This valuation must support the purchase price to ensure the borrower is not overpaying and that the business has sufficient cash flow to service the debt.
A buyer proposes a $1.2 million purchase price for a business. The lender orders a third-party business valuation. If the valuation comes back at $1.0 million, the lender must work with the buyer and seller to adjust the purchase price or inject additional equity to cover the shortfall, as the SBA will only finance the supported value.
Insider move
Lenders must ensure the purchase price is justified by an independent valuation that adheres to SBA standards. Financing an unsupported purchase price can lead to an ineligible loan, potential default risk, and a guaranty repair if the business cannot sustain the debt.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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.
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