For SBA lenders
Short answer
An independent business appraisal is required for all change of ownership transactions when the amount financed, less working capital, exceeds $500,000, or when a close relationship exists between buyer and seller.
For change of ownership transactions, when the loan amount (excluding working capital) exceeds $500,000, or when the buyer and seller are related, an independent business valuation is mandatory. This valuation must be performed by a qualified, independent third-party appraiser to establish the fair market value of the business and justify the purchase price.
A borrower is seeking a $600,000 7(a) loan to acquire an existing business. Since the loan amount exceeds $500,000, the lender would require an independent business appraisal to be performed by an SBA-qualified appraiser to support the purchase price.
Insider move
Lenders are concerned with ensuring the purchase price is justified by the fair market value of the business. An independent appraisal protects against overvaluation, which could lead to an undercollateralized loan or a finding of imprudent lending practices, potentially triggering a guaranty repair.
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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