For SBA lenders
Short answer
A business valuation by an independent, qualified source is required for all change of ownership transactions where the loan amount, less the value of real estate, exceeds $500,000.
SBA policy requires a business valuation to substantiate the purchase price and ensure that the loan amount is justified. For transactions involving a change of ownership, if the amount financed by the 7(a) loan (excluding any real estate financed) is greater than $500,000, an independent business valuation is mandatory. This valuation helps confirm that the assets being acquired support the loan size.
A borrower is acquiring a business for $750,000. The 7(a) loan amount is $650,000, with no real estate involved. Since the loan amount exceeds $500,000, the lender instructs the borrower to obtain an independent business valuation to justify the purchase price.
Insider move
Lenders are concerned with ensuring the purchase price is reasonable and supported by the underlying value of the business. An unsupported or inflated purchase price can lead to inadequate collateral, increased risk of default, and potential repair or denial of the SBA guaranty.
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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