SBA 7(a) Q&A
Short answer
The purchase price for an SBA 7(a) partner buyout is typically determined by an arm's length agreement, but it must be supported by an independent third-party business valuation.
For partner buyouts, particularly when there is a significant change in ownership, the SBA requires an independent valuation to ensure the purchase price is fair and reasonable. This valuation helps protect against inflated asset values or inappropriate uses of loan funds. The valuation must be performed by a qualified appraiser.
A buyer is acquiring their 70% partner's share of a business for $700,000. While they agree on this price, an independent business valuation comes back at $900,000 for the entire business. The SBA loan will be based on the validated value, ensuring the $700,000 for the 70% stake is reasonable.
Insider move
Lenders require a qualified, independent business valuation to substantiate the purchase price. They ensure the valuation adheres to SBA guidelines, mitigating risks of overfinancing or funding an unsubstantiated purchase.
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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