For SBA lenders
Short answer
If the business valuation is lower than the purchase price, the purchase price must be adjusted downward, or the borrower must contribute additional equity to cover the difference, as the SBA loan cannot finance the excess.
The SBA loan amount for an acquisition cannot exceed the fair market value of the assets being financed. If the valuation is lower than the purchase price, the lender must work with the buyer and seller to either reduce the purchase price to the appraised value or require the buyer to increase their equity injection by the difference.
A business is under contract for $1.5M, but the SBA-required valuation comes in at $1.3M. The buyer must either renegotiate the purchase price to $1.3M or inject an additional $200,000 in equity, above their minimum required injection.
Lenders must ensure the loan amount does not exceed the appraised value. This often involves difficult discussions with the buyer and seller, and careful recalculation of the loan structure and equity injection to maintain SBA compliance.
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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