SBA 7(a) Q&A
Short answer
The SBA relies on an independent business valuation to determine the value of goodwill, which is the intangible asset representing the business's reputation and customer loyalty.
Goodwill is an eligible use of SBA 7(a) loan proceeds. Its value is established through a qualified, independent business appraisal that adheres to SBA requirements. The loan amount can include financing for goodwill as long as it is supported by the valuation.
A buyer acquiring a successful branding agency for $1.5 million, where the tangible assets are only $200,000, would rely on an independent valuation justifying $1.3 million in goodwill. The SBA loan could finance this goodwill portion.
Insider move
Lenders require a robust valuation to ensure the goodwill component is accurately assessed and supported, as it is an intangible asset with no direct liquidation value. They want to ensure the business's true earning power justifies the total purchase price, including goodwill.
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 2026-06-13. 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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