For SBA lenders
Short answer
The SBA verifies the value of contributed equipment for equity injection through an independent third-party appraisal, typically for used equipment, or manufacturer invoices for new equipment.
When non-cash assets like equipment are contributed as equity, their fair market value must be objectively established. For existing equipment, an independent appraisal is required to prevent overvaluation. For new equipment, the actual purchase price from a reputable supplier, supported by invoices, is acceptable.
A borrower contributes a fully paid-off commercial oven valued at $20,000 as part of their equity. The lender requires an independent appraisal of the oven to confirm its fair market value for the equity injection calculation.
Lenders must ensure the valuation method is appropriate and that the equipment is truly unencumbered. Inflated equipment values are a common area of concern that can lead to guaranty issues.
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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