For SBA lenders
Short answer
For a change of ownership, an independent business appraisal is required if the total financing, including any seller debt, exceeds $500,000, even if the SBA-guaranteed portion is less.
SBA policy generally requires an independent business appraisal for all business acquisitions where the total project cost, including the purchase price, working capital, and any financed seller's note, exceeds $500,000. If the total project cost is $500,000 or less, the lender can use its own valuation or an independent valuation for prudent lending standards.
A borrower is acquiring a business for $450,000, and the loan amount is $400,000. No independent business appraisal is explicitly required by SBA. However, if the purchase price was $550,000, even with a $400,000 SBA loan, an independent appraisal would be mandatory.
Insider move
Lenders must ensure the purchase price is reasonable for a change-of-ownership. An inadequate valuation can lead to over-financing and jeopardize the borrower's ability to repay, risking a guaranty repair or denial. Adhering to the $500,000 threshold for appraisals is crucial.
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.
More on change-of-ownership underwriting
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