For SBA lenders
Short answer
A business valuation from an independent qualified source is required for all change-of-ownership transactions where the amount financed (loan amount plus any seller financing) exceeds $500,000.
The SBA mandates a business valuation to ensure the purchase price is reasonable and to prevent overfinancing. This requirement applies when the total financing (SBA loan plus any seller notes) for the acquisition is greater than $500,000, or when a close relationship exists between the buyer and seller, regardless of amount.
A borrower applies for a $400,000 SBA loan to acquire a business, with a $150,000 seller note. The total financing is $550,000 ($400k + $150k), exceeding the $500,000 threshold. The lender must obtain an independent business valuation to support the purchase price.
Insider move
Lenders must correctly identify the need for a valuation to avoid eligibility issues that could result in a repair or denial of the guaranty. They must also ensure the valuation is performed by a qualified, independent third party.
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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