SBA 7(a) Q&A
Short answer
The SBA relies on an independent business valuation from a qualified appraiser to determine the reasonableness of goodwill's value, particularly when it's a significant part of the purchase price.
For business acquisitions, especially those exceeding $500,000 or where goodwill is substantial, the SBA requires a qualified independent business valuation. This appraisal uses recognized methodologies (e.g., discounted cash flow, market multiples) to assess the entire business's value, including the intangible asset of goodwill, thereby validating the purchase price.
For a business purchased for $1,200,000 where tangible assets are only $200,000, the $1,000,000 goodwill component would be justified by an independent business valuation that analyzes the company's historical earnings, future projections, and comparable sales in the market.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. 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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