For SBA lenders
Short answer
For transactions exceeding $500,000, an independent business valuation performed by a qualified appraiser is always required to substantiate the purchase price and ensure it reflects fair market value.
SBA policy mandates an independent business valuation for all change-of-ownership transactions where the loan amount (or total project cost) exceeds $500,000. This ensures the reasonableness of the purchase price and protects the SBA's interest in the transaction, validating the underlying value of the business.
A lender is underwriting a $1,200,000 7(a) loan for a business acquisition. Because the loan amount exceeds $500,000, the lender commissions an independent business valuation from a credentialed appraiser to confirm the business's fair market value supports the $1,200,000 purchase price.
Insider move
Lenders must ensure the valuation is from an independent, qualified professional and is current. An absent, inadequate, or outdated valuation for loans over $500,000 is a severe underwriting deficiency that can result in a major guaranty repair or denial.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. 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
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