For SBA lenders
Short answer
An independent business valuation is required for change of ownership 7(a) loans where the amount financed (including any seller note) exceeds $500,000. It is also required when there is a close relationship between the buyer and seller, regardless of the loan amount.
SBA policy mandates an independent business valuation performed by a qualified source for all business acquisition loans exceeding $500,000. This valuation ensures the purchase price is reasonable and supported by market value. Additionally, if an identity of interest exists between the buyer and seller, or if the transaction involves an employee stock ownership plan (ESOP), an independent valuation is always required, irrespective of the loan amount, to ensure arm's length transaction terms.
A lender is underwriting a $750,000 7(a) loan for a business acquisition, with an additional $100,000 seller note. Since the total financing (purchase price) exceeds $500,000, the lender requires an independent business valuation from a qualified appraiser before proceeding.
Insider move
Lenders must correctly apply the valuation thresholds to avoid issues during SBA review. Failure to obtain a required valuation, or accepting one from an unqualified source, can lead to a guaranty repair or denial.
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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