SBA 7(a) Q&A
Short answer
The SBA ensures goodwill valuation is reasonable by requiring lenders to obtain an independent business valuation from a qualified appraiser for most acquisitions.
For business acquisitions exceeding $500,000, the SBA mandates an independent business valuation by a qualified appraiser. This valuation assesses the fair market value of the entire business, including its tangible and intangible assets (like goodwill), and justifies the purchase price and its allocation. The lender reviews this valuation for reasonableness.
If you are buying a business for $750,000, the lender will commission an independent valuation report. This report will analyze the business's earnings, assets, and market comparables to determine its fair market value and justify the allocation of the purchase price to assets and goodwill.
Insider move
Lenders carefully review the independent valuation to ensure it is thorough, well-supported, and adheres to generally accepted appraisal standards. They confirm the appraiser is qualified and that the goodwill component is justified by the business's financial performance and future projections.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-14. 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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