SBA 7(a) Q&A
Short answer
The SBA verifies the value of non-cash asset equity injections through independent appraisals or current fair market valuations.
If a buyer contributes non-cash assets (e.g., equipment, real estate, inventory) as part of their equity injection, their value must be independently verified. For assets above a certain threshold, a qualified, independent appraisal is required to establish the fair market value. The assets must be unencumbered and transferred into the acquired business.
A buyer injects $50,000 worth of unencumbered specialized manufacturing equipment they own into the acquired business as part of their equity. An independent equipment appraisal would be required to verify that the equipment's fair market value is indeed $50,000.
Insider move
Lenders need to ensure the non-cash assets are valued accurately and are genuinely unencumbered. They will require clear documentation of ownership and transfer, and a formal appraisal for higher value assets, to prevent inflated equity contributions.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
SBA Form 1919 - Borrower Information Form
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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