For SBA lenders
Short answer
Inventory and equipment must be valued at fair market value, typically supported by a third-party appraisal, especially if they are significant assets or collateral for the 7(a) loan.
For business acquisitions, if the loan includes financing for inventory and/or equipment as part of the purchase, their value should be established at fair market value. For significant amounts or when used as collateral, the SBA often requires independent appraisals by qualified appraisers for equipment and a detailed inventory valuation by an independent party or acceptable methodology for inventory.
A buyer is acquiring a manufacturing business for $1.2 million, including $300,000 in machinery and $150,000 in raw materials and finished goods inventory. The lender would require an equipment appraisal for the machinery and an acceptable valuation methodology (e.g., inventory specialist or detailed schedule at cost) for the inventory.
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