SBA 7(a) Q&A
Short answer
The business is valued based on its fair market value, determined by a qualified independent valuation, especially for loans over $500,000.
For all changes of ownership, including partner buyouts, the SBA requires that the transaction be for fair market value. For loans exceeding $500,000, an independent business valuation performed by a qualified third-party appraiser is mandatory to establish this value.
If two partners are in a business valued at $1,500,000 by an independent appraiser, a 50% partner buyout would be based on purchasing shares worth $750,000. The appraiser would use methodologies like discounted cash flow or asset-based valuations.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-15 · SBA sources checked through 2026-06-15. DealRoom analysis of the current SBA 7(a) rulebook for change-of-ownership / partner buyouts. 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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